Vodafone

Sometimes life is not fair. Sometimes we get unfairly snubbed at work. Sometimes we get stricken with bad health. The list is almost endless. But what about the stock market? Is that fair?

It should be. The price of a highly liquid stock like Vodafone represents the price that thousands of traders are willing to pay for it. It must be at its price for good reasons.

But sometimes the price of a stock just does not seem to make sense.

I have owned VOD for almost a year now. The price now is about the same as when I bought it. This is not a good performance.

During the time I have held Vodafone the dividends have doubled, countless millions have been spent on share buy backs and results have been robust. The latest results on Wednesday were strong, with VOD now having over 150 million subscribers on a proportional basis.

The P/E is less than 15 (ignoring amortisation.) The yield is almost 3%. Not bad for a company which still has a lot of growth left in it.

The brokers seem to think that the company looks good. In the past two weeks at least six analysts have rated VOD as a buy.

But still the share price refuses to budge upwards. Why why why? Are the buy backs making any difference? Does the higher dividend mean that people just see VOD as a utility stock? Is some large institution gradually dumping all their position?

I wish I knew. At times like this the quality needed is patience. VOD will rise, it is just a question of when. You cannot predict where the market is going to go but if the stock you own is of the highest quality and was bought at a good price then you have a good chance.

Having said that if this stock is still at 140p in one years time maybe it will be time to give up!