Stock Pitches for Stocks in telecommunications industry
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1. Select 3 not-so-well-known stocks in the Telecommunications and Internet Infrastructure markets. Clarification: 3 total.
2. "Pitch" a potential investor these 3 stocks (i.e. tell why they are good investments). These stock pitches are regularly given and asked for on Wall Street.
3. Some guidelines: each recommendation should be 6 sentences long - you can write more sentences if you wish, but not less.
4. Structure it like this: Make an actionable recommendation - why an investor should buy this stock - and get to the point in the beginning with a quick summary sentence (i.e. "I think Company X is a great investment because it's undervalued next to the competition and has been diversifying its operations and getting into higher-margin businesses.")
5. List 3 key reasons why you like or don't like the company, followed by how these reasons are different from the consensus. It is essential to understand what the "mainstream" thinks in equity research like this and then think differently from others. This analysis gets big-name investors to pay attention to someone's recommendations.
6. Summarize what you think the stock should be valued at ("Right now it's at $20, but I could see it rising to $30 within the next year") and explain how you reached this conclusion. You might talk about comparables, DCF analysis, or other methodologies, many of which you would probably also use in banking.
7. The biggest mistakes people make are not actually giving a recommendation or not focusing on just the important details
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Solution Summary
Analysis of three stocks from telecommunications industry is examined.
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STOCK PITCHES- TELECOMMUNICATIONS AND INTERNET INFRASTRUCTURE
Stock # 1
Century Link, Inc. (CTL)
Century Link is a great buy given one year return fetched by the stock was about 26% and the businesses for company's data storage and broadband services is growing.
Century Link mainly caters to rural areas in the US, which means that there is lot of untapped potential which can be tapped by Century. On the negative side CTLs landline phone business has drastically reduced as no one is buying a landline phone these days. CTL also cut dividends by 26% to free up cash flow to fund the stock repurchase program. While it does not offer an attractive discount, the annual payout rate is $2.16 per share, which is sustainable. However CTL has managed to recover some of the losses by expansion into new services like fiber optic TV.
Reasons for like/dislike
I like the stock because of its financial flexibility and ability to manage upcoming maturities. Most of the financials of CTL are within Fitch's estimates. The reduction in annual dividends has improved free cash flow for the company. It has also increased net cash returned to shareholders.
Probable Stock Value
The stock is currently trading at $28.61 and has upside ...
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