Going the way of the Dodo: 3 reasons to watch Vocus Group Ltd shares in June

The Vocus Group Ltd (ASX: VOC) share price has bounced back in recent weeks; as the owner of Dodo, Primus and M2 Group refuses to go extinct.

Here are three reasons I like the look of Vocus Group shares at today's prices:

1. Margins. Every investor in the Australian telecommunications industry is concerned about one thing: margins. Under the National Broadband Network (NBN), internet providers like Vocus will be required to pay a fee to access the network. The difference between the NBN access fee and your monthly internet bill is the company's profit margin. While we do not yet know the full extent of the charges – which is causing much of the concern amongst investors – Vocus appears to be rapidly gaining ground the NBN, including increasing its market share.
2. Fear. The difference between opinions is what makes a market. Right now, investors' fear is coming from uncertainty. Margins are one of those uncertainties, but Vocus' debt and issues with its three most recent acquisitions are making it hard for some investors to get their head around the company's financial position. While Vocus is a higher-risk investment proposition, the best time to buy shares in companies is when fear rules the market.
3. A good business. Less than 24 months ago, Vocus was one of the most sought-after shares on the entire Australian stock market. But here's the thing, it remains a good business! While there are risks, the underlying assets of the business have little changed. And to back up the company's financial position, it has an extensive fibre network and associated assets, meaning it is much more than a reseller on the NBN.

Buy, Hold or Sell

I recommended that investors with a thick skin and healthy appetite for risk consider buying Vocus shares. Indeed, a reduction in the company's annual dividends and further issues integrating the acquisitions of NextGen, M2 Group and Amcom could see the share price sold off again. So if you cannot stomach volatility, give her a wide berth. However, with a view to the long-term, Vocus could be worth a punt at today's prices.