TPG Telecom Ltd share price sinks again, should you be selling now?


Shareholders of TPG Telecom Ltd (ASX: TPM) just can’t seem to catch a break at the moment. The growing telecommunications company’s shares have dropped lower yet again despite no news out of it. This time they have dropped by as much as 5%, extending their monthly decline to a massive 35%.

Although it is clearly a difficult time to be a shareholder, I would suggest investors stick with it. TPG Telecom’s shares may have been trading on a high earnings multiple, but I don’t believe for a second that its recent full year results justify it losing over a third of its market value.

Whilst it was disappointing to see management forecast for higher capital expenditures and lower-than-expected growth in the year ahead, I feel confident that the company has strong long-term growth prospects thanks to the potential market share gains it could win from rival Telstra Corporation Ltd (ASX: TLS) through the NBN rollout.

I don’t appear to be alone in this view either. Analysts from both Citi and Morgan Stanley have recommended TPG Telecom as a buy in the last couple of weeks.

According to their research notes they have placed price targets of $13.35 and $10.75 respectively on its shares. With its shares trading as low as $7.85 today there is significant upside potential as far as these analysts are concerned.

Only time will tell whether TPG Telecom’s shares will reach these price targets. But if the company can convince the market that the forecast 7% EBITDA growth for the year ahead is just a temporary slowdown, then I fully expect its shares to retrace a good portion of these declines.

Right now I would put TPG Telecom up there with fellow telco Vocus Communications Limited (ASX: VOC) as one of the most attractive investment options for investors on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

If you're still not sure about TPG Telecom then these rapidly growing shares might be better options for you.

Why These 3 Blue Chip Shares Are Set to Soar in 2016

Discover The Motley Fool's Top 3 blue chips for 2016. These 3 'new breed' shares pay fully franked dividends AND offer the prospect of significant capital appreciation. Simply click here to gain access to this comprehensive FREE investment report.

No credit card required!

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.