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hi youtube and welcome back to another update today we're going to be talking about nokia so nokia's on fire recently and i'm delighted to see that because it's got good fundamentals and up until this point throughout 2020 we've seen companies with poor fundamentals really outperform 5 10 20 x whereas nokia is a really really solid company a lot of people misunderstand this company as of right now the ratio of assets to liabilities is about 1.64 which is okay but if you go a little bit deeper into liabilities you realize that about 10 billion is amortized over the next 10 years through pensions and long-term debt so the balance sheet is really solid it's generating 600 million in free cash flow and it's in an industry that's doing tremendously well and it's expected to grow over the next decade there is one mishap that nokia have and that's their late investments into 5g however they're turning it around really quickly and that's what i want to talk about here today there's a reason why the share price was up 15.5 yesterday there's a reason why it's up nine percent pre-market today it's currently trading up about eight and a half percent in european hours at the moment so today should be a fantastic day yesterday on the open i may knock you on my second biggest position after today if it is up 9 10 it will most certainly be the biggest position of my portfolio true to my word that was my expectation this is a company with fantastic fundamentals and i'm a long-term holder of this company expecting that we might even get a little bit of a tailwind throughout the summer as they possibly reintroduced their dividend yield once more anyway let's get straight into some of the fundamental catalysts that are driving the share price higher so what we've seen yesterday is a financial group in sweden known as seb these have a pretty good reputation according to nasdaq and these guys pretty much upgraded the stock and what they said was the financial group argued that nokia stock is undervalued in comparison to its swedish rival ericsson we spoke about that previously at the time we were talking about it nokia was priced at about six times evt ibra and ericsson was priced at eight times evt ebitda and we suggested that just to get to fair value with ericsson nokia would need to rally 30 percent so it's kind of a shame that the market needs to wake up because an analyst comes out and points that out but anyway we'll take it so 15 yesterday nine percent pre-market today so that's essentially what caused the jump yesterday they had a targeted price of 425 to 460 and we discounted that pretty much in the first day so the first catalyst was we're seeing nokia get to a point of fair value relative to ericsson the second catalyst that we've been looking for for long term over the next three to five years to say a five or 10x potentially is catching up with 5g now i don't really care about them being a leader they've definitely dominate in the market with about 20 to 22 market share and we really care about them performing and capturing growth moving forward even if they continue to command about 20 to 22 percent over the next couple years they'll continue to outperform analysts expectations in terms of top line and bottom line revenue and that's all we really care about so as of right now we're focusing on nokia and what we're looking for is we're looking for a number of signs to suggest that they'll be able to go into strategic partnerships in order to catch up with 5g the first strategic partnership we mentioned in the first video that i don't back in december that's the partnership with qualcomm i think that's a very very very interesting partnership there's a second partnership that happened in the last couple of weeks and that is with mobley pilot so these guys are producing fixed wireless access network slicing whatever that means i'm not sure i'm not as technical but i understand the fundamentals in terms of the financials and the opportunity that exists however when i see that this is a world's first it gives me the indication that through these strategic partnerships nokia can jump a few places back up to a leader in this market pretty quickly and that's essentially what we're looking for these are now providing good quality wireless networks throughout the middle east well more specifically saudi arabia but these can start dominating across the board here another piece of good news that came out is biden's approach to us china relationships is going to be approached with patience i think everybody is dead wrong on biden everybody assumes that joe biden is in china's pocket i think you're dead wrong i think everybody's dead wrong and the early indications suggest that so the first thing that was very interesting was right before biden's inauguration a couple of weeks prior to that if you guys want to look it up mike pompeo canceled the one china policy and essentially that allowed the united states officials to start integrating with taiwanese officials and that really got under the skin of china secondly bidenstein reached out to the ambassador of taiwan in the united states invited her to the inauguration and that really boiled the blood of of the ccp now it's very important to differentiate the chinese people from the ccp chinese people great hard-working people ccp toxic and that's where the friction is at the moment so we're starting to see an approach from biden which is anti-consensus right i don't think you're going to see a good relationship between the united states and their allies and china i don't think it's going to happen and i actually think we're going to actually continue to see some of the policies such as a ban on huawei remain in place the reason why that's important is because nokia have directly benefited from that there's not too many opportunities for a number of different countries in order to supply 5g outside of nokia and a couple other companies so it's directly benefiting nokia which is fantastic so we're anticipating that the tensions between the us and china is going to remain in place for a little bit longer which is a tailwind for nokia unfortunately it's not because they've got best-in-class services and products however they're catching up but more it doesn't really matter they're still going to end up doing tremendously well so catching up in the middle east catching up across the western regions with qualcomm i think that we're getting to a point where nokia is really starting to fire on all cylinders i'm a huge fan of peki lundmark i think he's going to do tremendously well and already in six eight months he's absolutely knocking it out of the park with all of these strategic partnerships so i'm really really excited another thing i want to point out is the current valuation even after yesterday's 15 rally it's still only had about eight times evt ebitda just to be very clear i think even 10 times evt even after this industry is far too low probably should be closer towards 12 to 15. so if we're chasing ericsson it's still undervalued the company is still under value by a tune of about 10 to 15 just to get back to fair value with erickson so valuations still need time to catch up strategic partnerships are offering growth potential into the future you're starting to see analysts recognize that and i think what's going to start to happen is these estimates for top line revenue which are pretty much flat at the moment i think you're going to start to see them grow over the next couple of years i think you're going to start to see analyst expectations increase for top line revenue now it's also important to mention that pekka lundmark had mentioned that 2021 would be a reasonably flat year as they make all these strategic changes and then 2022 they're going to bear the fruits of all those partnerships so i'm not expecting massive things in 2021 but i am expecting analysts to start to recognize the longer term growth opportunity in nokia which is going to provide a long-term tailwind i also believe that nokia is going to benefit in the next recession and the reason being is normally to get all this infrastructure for an awful lot of corporations it's the upfront costs are very expensive not when you go to knockouts to network as a service and so it reduces the upfront cost for an awful lot of these corporations so if they need to upgrade their services while the economy is starting to decline nokia is a fantastic opportunity with their network as a service so i think it's going to be extremely durable over the next number of years out within a recession or outside of a recession it doesn't really matter so an awful lot of benefit is happening with nokia and i'm super delighted to see it as of right now my initial investment's up well in excess of 20 um not including the pre-market 9 rally so let's have a look at the chart structure i am here to tell you guys to be patient in the last couple of days it's been very exciting which is great but we've barely you know pushed the needle here there's still a long way to go here for nokia and it's it's really only getting warmed up so it's going to take a couple of years but i think we're getting back up to new highs i really do i think there's going to be a tremendous upside opportunity here in nokia over the next three to five years i think the market is still way offside even though people are starting to recognize it a little bit more so let's start out in the weekly chart let me refresh your memory of what our expectations are from a bigger time frame perspective so this breaks down in the wave a up in a wave b and then we break down a one two three four five for wave c that's what's known as a flat correction from there we would expect at the very least three waves up so it could be down and three up and three and down and five and even in that circumstance that would be the worst case scenario you'd still be looking for a move up towards twelve dollars i don't think that's the case because the balance sheet is very very healthy there is the ceo i think is firing on all cylinders in such a short period of time they're catching up in terms of 5g and they're already starting to identify what 6g is going to be which is going to give them a head start in terms of ip so i think that this is very unlikely from a fundamental perspective to be an a b and a c up towards 12 i think this is probably going to be some sort of wave four and this will be some sort of secular fifth wave which would bring us up to a new all-time high over the next couple of years so this ended back in 2012 just to give you a bit of perspective into time horizons so this ended in 2012 a rally is up in a wave one two three four five general direction of the trend is now on the upside it's very much bullish longer term it then breaks down from 2014 into 2020 so a six-year correction three triangle five that there's what's known as a flat correction with a triangle five-wave structure there for the wave b a b and c from there we know it's correct that we've got five up three down we're expecting five up out the other side i believe that this is a long-term bullish trend and i'd be anticipating probably up towards a sorry a 1.618 extension of this first wave here that would bring us up to 36 dollars again over the next couple of years very important to understand the time horizons from 2012 in 2014 we seen a rally off the lows for your first wave and then we seen a six-year sort of bear market for a wave two we could easily see three to four years on the upside just for this wave three here so just up here this could take three to four years in time horizon however going from you know below four dollars up to thirty six dollars is a pretty ridiculous return over a three to five year time horizon it's also important to note that once we get up there this year is not finished this is only a wave three we get some sort of sideways consolidation around those fibonacci retracement levels 28 to 23 dollars before you push back up to a new all-time high so although this is quite exciting just remember the longer term expectations it's currently trading even pre-market up nine percent at five dollars and 29 cents this is still the very beginning of the move it's not going to go in a straight line there are going to be corrections along the way so with nokia a lot of patience longer term it's still undervalued relative to ericsson the fundamentals continue to improve solid balance sheets solid cash flow we might even get a kicker with a dividend yield in the summer they've cancelled their dividend yield now since the summer 2019 so two two years on as the fundamentals improve strong cash flows good solid partnerships reinvestment via an awful lot of funding from from grants i think that we might even see a dividend yield by summer of this year which might bring in a new set of investors who knows personally i'd prefer that they took all of that cash and went aggressively after the market there's a lot of market share to be taken and with pekka lund mark in charge i'm really impressed with this guy i really am i think he's doing a tremendous job anyway guys i'm going to digress there fantastic couple of days for nokia longer term this is absolutely a buy and i think we're going up to new all-time highs i think over the next three to five years we should be expecting a move up towards 36 according to elite wave but that's not the end of the move there's still further upside to go thereafter and i'm definitely a long-term holder of nokia in anticipation for some fantastic performance trade 2021 2022 and 2023 anyway guys with that said i've taken enough of your time thank you all very much for your support and until next time have a wonderful day peace