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Telstra Corporation Ltd falls 5% in a month: Should you buy?

If a market enters a correction phase then investors with a long-term focus can pick up some great stocks trading at a discount.

Technically, we’re not in a 10% correction yet – the S&P/ASX 200 (INDEXASX: XJO) is down only 7.44% since the beginning of September – but it could be time to start browsing for great investment ideas.

With interest rates so low, companies such as Telstra Corporation Ltd (ASX: TLS) will be at the top of investors’ shopping lists.

Indeed, its 5.5% fully franked dividend is hard to ignore, especially for Self-Managed Superannuation Fund (SMSF) holders, who benefit from a lower tax rate.

Telstra shares have fallen 5% over the past month, so there are a number of reasons why now could be an opportune time to buy in.

However, I believe Telstra shares are not a great buy at today’s prices. In fact, I think fair value for the company lies below $5.00 per share.

That’s despite the telco targeting growth in Asia, a booming Network Application Services (NAS) division and the recent buyback. Anything above $4.80 per share (a 10% discount to today’s prices) wouldn’t leave an adequate margin of safety, if any, in my opinion.

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

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