Buying China Mobile shares might be a good idea in October

China Mobile (NYSE: CHL) shares have advanced above $32.7 at the beginning of October and the current price stands around $32.4. The technical picture implies that the price may advance above $35 this October but there are also some obvious risks when it comes to buying China Mobile shares.

Fundamental analysis: The company has a stable dividend and has the intention to sustain payouts

Shares of China Mobile could be a good investment option and most financial analysts are expecting its price to rise considerably in the next several years. China Mobile provides mobile telecommunications in China, the company serves 950 million mobile customers and 187 million wireline broadband customers.

According to the latest news, China Mobile and Alibaba could invest $443M in surveillance equipment maker Zhejiang Dahua Technology. The joint investment could happen in the coming weeks and this is certainly positive news for both companies.

China Mobile is handling the coronavirus threat very well and it is attracting investors' attention in this uncertainty on the financial markets. The profitability of China Mobile is better than that of its competitors, the company has a stable dividend and has the intention to sustain payouts.

In the last ten years, the revenue of China Mobile achieved constant growth and the company has paid more than $24B in dividends to its shareholders in the last three years. If we compare total stockholders' equity of $159B and the market capitalization of $131B, we can notice that this stock is not overvalued and maybe now could be a good time to buy China Mobile stock.

If you decide to trade China Mobile shares this October you should have in mind that there are also several negative facts that are connected with this company. The global pandemic and the US-China tech war could have a negative influence on the revenues and profitability of China mobile.

China Mobile is now going through a hard time as the 5G base station projects, the cheap 5G mobile plans and the worsening trend of its cash position all seem to be threatening the telco’s business. China Mobile is facing challenges in these uncertain times but the current dividend makes it one of the steadier players in the region.

Technical Analysis: $30 represents a very strong support level

When we take a look at the chart above ( one year period), we can see that the price of this stock has weakened from $44.9 to $30.12 and started to raise. On this chart, I marked important resistance and support levels.

The important support levels are $32 and $30, $35 and  $40 represent the resistance levels. If the price jumps above $35 it would be a "buy" signal and we have the open way to $38.

Rising above $40 supports the continuation of the bullish trend and the next price target could be located around $50. If the price falls in the upcoming period, every price in a range from $20 - $30 could be a very good opportunity for buying China Mobile stock.

Summary

The profitability of China Mobile is better than that of its competitors, the company has a stable dividend and has the intention to sustain payouts. Shares of China Mobile could be a good investment option in October but you should have in mind that there are also some obvious risks.