Thursday, March 22, 2012

Introducing Global Stock - TELEFONICA S.A (TEF)

I have been monitoring for these two global stocks with high dividend play yield, France Telecom (FTE) and Telefonica (TEF). Today's post will bring us to Telefonica, the number one Spanish private telecommunicator company.

Telefonica, S.A. provides fixed and mobile telephony services primarily in Spain, rest of Europe, and Latin America. Its fixed telecommunication services include PSTN lines; ISDN accesses; public telephone; local, domestic, and international long distance and fixed-to-mobile communications; corporate communications; video telephony; supplementary and business-oriented value-added services; network services; leasing and sale of handset equipment; and telephony information services.

7 reasons TEF is a solid value at current price share:

1.) It has solid operating cash flow (under 4 times market capitalization) and yields a robust >10%.

2.) The company gets more than 2/3's of its revenues from fast growing Latin America so is shielded significantly from the problems in its home country. Increasing smartphone penetration is also increasing its revenue per user. Telefonica Brasil is a particularly strong performer in its portfolio.

3.) The stock is cheap at under 8 times forward earnings and less than one times revenues (.91).

4.) The company has a low beta (.99) despite the problems in Europe. It also sports a "Buy" rating and a $20 price target from S&P reports.

5.) Earnings estimates for FY2011 and FY2012 have gone up over the past two months.

6.) The stock is selling at the very bottom of its five year valuation based on P/E, P/S and P/B.

7.) The stock has strong, long term technical support in the $16 to $18 range (See Chart)


  1. i got unvested in this due to the debt situation. it is something to get worried about. don't be seduced just by the high yields

  2. I had invested in Telefonica. I don't mind buying more.