Why I’m close to buying Telstra Corporation Ltd shares

Credit: Telstra

When to buy Telstra Corporation Ltd (ASX: TLS) shares?

I’m sure that’s a question on the minds of many investors. I’m certainly considering it.

We’ve all heard the bad news. And it seems things are getting worse, particularly in the NBN department.

Now, news is out of Telstra being hit with a compensation bill from 42,000 customers who wanted a faster internet service but claim they didn’t get it.

And the company’s share price took another hit, closing on Wednesday at $3.46, down by about 3% in November alone.

Will the bad news keep coming? Who knows?

There’s a range of conflicting opinions kicking around which only seem to add to the confusion.

In the last couple of months we’ve heard analysts offer a variety of price targets for Telstra stock.

UBS said it expects it to move to $3.90, Deutsche Bank analysts retained their buy rating and increased the price target on Telstra shares to $4.05 and Citigroup reduced their share price target from $3.35 to $3.25.

None of that helps me much.

But the more the Telstra share price drops, the more I’m interested.

Telstra provides a service that most of us need and as an increasing number of people plug a greater range of devices into the internet, Telstra has a greater opportunity to capitalise.

And while we’ve heard the doom and gloom stories about the NBN kerfuffle, let’s not forget the positives.

Telstra states its NBN connections grew by 676,000 to 1,176,000, bringing total market share (excluding satellite) to 52% in financial year (FY) 2017.

Telstra also said that in FY 2018 it expects EBITDA of between $10.7 billion to $11.2 billion.

Although the low end of that projection is in line with FY 2017’s EBITDA of $10.7 billion, there is room for a touch of optimism.

And while Telstra, with a market cap of $41.27 billion, remains one of Australia’s biggest and best known companies, any slump in its share price can be viewed as a potential opportunity.

I will be watching Telstra closely but I’m not ready to jump in yet.

If its share price comes down a bit more, I’ll go for it.

But now there’s too many other opportunities that I think are more appealing, like CSL Limited (ASX: CSL) or Altium Limited (ASX: ALU).

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Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia owns shares in Altium. 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.

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