Nokia (NOK) investors could be in for a refreshing blast from the past in 2019.
First of all, it's no secret that Nokia has not been what one would consider a hot stock... in years. Shares of the Finnish phone maker have traded in the red throughout Thursday, pushing the stock price to sub-$6 levels at its lows.
The paltry price on shares is even more pronounced when compared to the last time Jim Cramer recommended the stock in 1997. After that recommendation, the stock surged from under $5 per share to almost $60 per share before the dot com bubble burst and dragged most tech stocks on the way down.
By 2012, after years of decline, shares were priced at nearly $2 per share as Apple's (AAPL) iPhone and Samsung's (SSNLF) phone offerings crushed all competitors. For reference, while Nokia sunk from $60 to just $2 in the span of 12 years, Apple stock surged nearly 3,000%. Even more pronounced, Nokia stock lost nearly 75% of its value in just two years following the release of the iPhone.
Yet, that could shift thanks to 5G and a governmental helping hand as Nokia seeks to ignite the network business it began targeting once shedding phones to Microsoft (MSFT) in 2013.
"These once-beleaguered companies now have a chance to win the race for 5G supremacy," Jim Cramer said on Wednesday evening's edition of Mad Money. "Their equipment might be more expensive than what the Chinese can make. Sometimes I think a lot of people would say it's even lower quality. Actually, I think the majority might say that. But you better believe neither Sweden nor Finland are pressuring their companies to spy on their customers."
Now that Cramer is again recommending the stock amid some macroeconomic motivation, it's time to examine what catalysts could make the once popular mobile phone manufacturer great again.
It starts with the nascent shift to 5G networks across enterprises.
"We have a clear opportunity in the form of private wireless networks, both 4G and 5G, an increasing demand for public safety systems, as well as routing, optical and digital automation solutions to support the industrial Internet and more," Nokia CEO Rajeev Suri told analysts on the company's fourth quarter earnings call January 31. "Our success in this market puts Nokia in a strong position to benefit across the full end-to-end 5G cycle."
The bullishness on adoption of Nokia's services specifically bodes well, as it coincides with macro pressures on the key roadblocks to its growth in the area from ZTE (ZTCOY) and Huawei.
Essentially, it would be like banning iPhones in 2008 when Steve Jobs' brainchild was leveling Nokia's smartphone market share.
Analysts are also keying in on Nokia to be a dark horse winner in 5G, breaking with its long slumping trend.
"We believe the 5G investment cycle will further strengthen Nokia's market position and anticipate market share gains longer-term, as we believe Nokia is well positioned with leading carriers for 5G deployments," Canaccord Genuity analyst T. Michael Walkley said. "In fact, we believe only Huawei and Nokia have full end-to-end product portfolios with wireless, fixed networks, and IP routing solutions, positioning Nokia for leadership with the top carriers as networks transition to 5G."
He added that Huawei, the only real competitor in his view, can largely be taken out of the equation as it is banned from many global markets.
"Consistent with the company's strong market position, we expect Nokia to first benefit from 5G investments in North America ramping in 2019 followed by South Korea, Japan and Nordic countries in the second half of 2019," Walkley explained.
Walkley raised his price target to $7.50 per share and reiterated a "Buy" rating on the stock.
The company has also shown an ability to maintain solid margins as the 5G cycle ramps, giving it a competitive advantage on the already handicapped competitors in the space.
Based on its late January guidance, margins are expected to expand from 6% to 6.9% during the year. Some analysts think this remains conservative and the actual results could be even better.
"With the margin machine working, investors can take their own view on network spending, but with gross margin guide conservative, we see no reason not to be involved in the stock at the start of the 5G cycle," J.P. Morgan analyst Sandeep Deshpande said in his bullish note.
Overall, 10 different analysts surveyed by FactSet raised estimates in 2019 and the analyst consensus remains a "Buy" on Nokia.
It's been quite some time since such a ground swell has existed for the persistently punished stock.
With a share price hovering below $6 per share, many investors could certainly be tempted to welcome a long-lost friend back into their portfolio.