The telecoms market sector has experienced its shares of ups and downs for nearly three years running. But, as most market watchers know, every dog has its day, and even the telecoms, which are now showing nascent stirrings, will eventually come back. (This ever-changing industry can leave investors scratching their heads. Find out which metrics matter in Dial Up Choice Telecom Stocks.)
Telecoms are priced and behave in large measure like utilities. Big dividends, lower price/earnings ratios and generally superior value fundamentals characterize the stocks in this sector. And as it turns out, the best of the group is now found among the foreign telcos that trade on the NYSE as ADRs. Here's a sampling of them with salient ratios appended.
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Sunny Brazilian Dividends
Telecomunicacoes de Sao Paulo SA (NYSE:TSP) is a fixed line communications firm that operates in and around the world's largest city. Sao Paolo, Brazil, is currently home to just over 11 million, while the surrounding area is home to twice that number.
TSP stock offers investors an annual dividend of 10.16% and trades with a price/earnings ratio of just 8.19. For the last 12 months the stock is practically flat; compare that to the iShares Global S&P Telecommunications ETF (NYSE:IXP), which recorded a gain in excess of 16% over that period. For comparison sake, the American telecoms, as represented by the iShares Dow Jones U.S. Telecom ETF (NYSE:IYZ), managed a better than 25% rise on the year.
Wooly Annual Payout
Telecom Corp. of New Zealand(NYSE:NZT) has a hefty annual dividend yield, currently paying shareholders 11.07%. Price/earnings ratio comes in at an impressive 8.31, too. For the year, the company is roughly in line with the global telco set, registering a gain of 14%.
One note of potential worry for NZT investors is a rash of recent problems with the company's broadband network that have led to a reduction in earnings and calls from some quarters to cut the dividend. (Interested in adding dividends to your portfolio? Read 4 Stocks With Smoking-Hot Dividends.)
Small, Thriving Central European Telco
Shares of Magyar Telecom Plc (NYSE:MTA) were up over 65% for the last 12 months and carry a 9.74% yield per annum. The stock trades with a multiple of 10 times last year's earnings and is relatively small compared to the majority of national phone carriers. Market cap on MTA is $4 billion.
Foreign telecoms are sporting some of the best fundamental values on Wall Street. When that value is recognized and bought is an eventual certainty. The only question for investors is whether they possess the patience to sit and wait.
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