Forum Archive Index - January 2001

["Grant Keymer" <grant@jenlogix.co.nz>]

Hugh,

 

I couldn't agree more with your comments about the NASDAQ.

 

"this is just more incredible insane Lotto type stuff"

 

I think that sums it up perfectly.  All the massive structural problems for DOT.COMs remain, just as you said.

However, keep in mind that the NASDAQ includes technology stocks such as INTEL, MICROSOFT, CAPSTONE etc which may still be overvalued, but definitely DO have a future.

 

In the overall sphere of Telcos, I agree that the chances of maintaining upward momentum are limited.

However, there is still such a thing as an oversold Telco, poised to stage a comeback, and I believe this applies to TEL.  Here are some actual figures and forecasts for the next 2 years which make interesting reading:

 

---------------99a--00a---01f---02f
=======================
Sales($M)    3452 4346 5203 5729
EBITDA($M) 1959 2009 1972 2063
EPS (c)------ 47.2  46.2  36.9  37.3
DPS (c)------ 46     46     17    17
Free Cash
per share---- 59.8  24.8  -13.3 16.2
PE(@$4.70)  9.95  10.2    12.7 12.6
Gross Yld
(@ $4.70)  14.6% 14.6% 5.4% 5.4%

They were compiled the other day when TEL was around $4.70, but @ Friday's close of $4.90, they aren't too far out.  By cutting the dividend from 46cps to 17cps in the current year, TEL is well on the way to having a similar amount of cash available for reinvestment as to what it had in 99.

The days of shareholders milking all the profits are gone, which is why the share price has plummeted this year. The forecast earnings growth is where future returns will come from. Together with a Gross Yield of 5.4%, it's a pretty good story.

I've been buying up TEL while it was at low levels because I believe that by holding for 1-2 years, it would be hard to go wrong with a PE of around 10, and a yield of 5.4%.

 

3 out of 12 of the Broker's picks for 2001 (as published in this morning's Business Herald) also include TEL which is interesting.  I wouldn't like to say it will be a top performer for 2001, but I certainly believe it will produce a good return this year and is worth holding as part of a portfolio of NZ shares.

 

Cheers

 

Grant Keymer
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