Under the Radar: Junior Telcos look good value07.05.2013

The interest rate cut will keep Telstra’s shares hovering at a record high valuation, but here is the news: it’s the tier two and tier three telco firms that will generate share price growth.
Five years ago the internet service provider market was teeming with telcos - there were literally hundreds of them. Okay, maybe it was still dominated by a dozen or so.
Today, it's whittled down to 5 - TPG, M2, Telstra and Optus.
There is little value in Telstra, but its 6 per cent dividend yield will keep it well bid. The real value in the sector lies in the second tier plays - TPG, iiNet and M2.
While TPG is a little expensive, the latter two look cheap by historical standards.
These stocks have market caps over a billion, so they're not really Small Caps, which are under the radar. But they are definitely worth checking out.
Best wishes
Richard Hemming

About the Author

Richard Hemming

Investment analyst and Editor of Under the Radar Report

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