3 telco stocks every investor should own!

In this telecommunications industry, there’s one top stock for every type of investor.

In the telecommunications industry, there’s one stock to suit every investor. Here’s 3 of the best on offer today!


M2 Group (ASX: MTU) is the owner of brands such as Primus, Dodo, Eftel and Commander. Despite growing earnings at an incredible 5-year average of 33.1%, it currently trades on a forward price to earnings ratio of just 11! With a forecast dividend yield of 4.4%, investors have been unreasonably bearish on the stock. Although its debt to equity ratio has climbed to 110%, it’s for the right reason: acquisitions. Recently management announced debt would fall quicker than expected and they would again look to acquire businesses to grow their customer base. They singled out energy as a key market for consolidation.


Currently trading on a price to earnings ratio of 39 and a price to book ratio of 4.83, you be forgiven for believing Vocus Communications (ASX: VOC) is overvalued. Vocus provides infrastructure heavy communications networks which span between a number of countries and provide high performance, availability and scalability. Its track record for growth is extremely impressive with both revenue and underlying EBITDA notching up a compound annual growth rate (CAGR) above 50%. In the most recent half-year, Vocus grew underlying earnings 52%.


No surprises here. Telstra Corporation (ASX: TLS) is still one of the most reliable dividend payers on the S&P/ASX200 (ASX: XJO) (^AXJO). Its current forecast dividend yield for FY14 is 5.5% plus franking. However Telstra is not void of a growth. Its International and Network Application Services (NAS) divisions both grew sales by nearly 30% in the first half of 2014 – quite impressive for a company with a market capitalisation of over $64 billion! What’s more, management have been active in divesting non-core assets and have hinted they may even return excess funds to shareholders.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.  

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