Nokia Corp (ADR) (NOK)

TMFinept (< 20) Submitted: 9/14/06 3:58 AM : Start Price: $18.49 NOK Score: 16.52

Nokia's global presence and logistics are its strongest assets and the moat that separates it from all of the world's competitors. Although its presence is minor in North America, Japan and Korea, elsewhere in the world there is Nokia and then there's everybody else. Nokia is the brand that people across the world turn to for quality and durability. The brand's cachet is like a second, narrower moat within the one represented by the company's business.

In particular, Nokia's investments in developing countries are just starting to show results and stand to offer much more in the way of returns for the future. Competitors in the developing world may be able to compete with Nokia in terms of price, although not without taking some licks, but nobody can compete with Nokia in unit volume. ASPs will rise as consumer tastes and earnings in developing countries evolve.

Nokia runs its business conservatively and maintains pristine balance sheets. Its economies of scale allow it to maintain industry leading margins which, when combined with the company's warchest, will allow it to compete much more vehemently than other companies in the field can afford to.

The stock is quite volatile for a company of this size, and some of this volatility can probably be attributed to the fact that Nokia's an ADR, but in the long run I think Nokia's going to end up a winner.

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