Telstra a Long Term Buy

Submitted by Marco on 19 April, 2006 - 13:47

An article from the Intelligent Investor reckons Telstra is a Long Term buy. The Telstra share price is hovering at absolute lows and it is tempting to buy into the stock on the principle of buying stocks cheap in the hope for selling it high. But according to the subscription service that now is the opportunity to get into this blue chip stock. They did recommend the stock earlier in October 2005 long Term Buy at $4.22. People who bought it at those levels must be hurting though. They also recommended the stock in February 2006 at the price $4.06. As I write this article TLS is trading at $3.66. Is it time to buy this ailing telco? Telstra has been the pain of many household investors and many have held on hoping that stock prices are going to recover... Some may have exited the stock when it hit their stop loss - for those people this may be the signal to get back into the Telstra stock price game. Anyway... They are still recommending the stock... forget the dividends they say - they should use that money to protect their competitive position.

They say Telstra does hold one drawcard opportunity: The Internet. Telstra has 3 million internet users signed up. There is still room for growth and if you look in to the future there are still more serives thay can provide like movie downloads - and as TV shows look to the internet for more income as the trend is in the USA - revenue per customer should increase. In the short term the ACCC may still pose some continuing problems for the Telsta TLS share price - but in the longer term revenue from these broadband services should far outweigh the declining revenues from fixed lines. Telstra is still not cheap at 15x forecast earnings. Intelligent Investor says "Our preferred situation is to know that we’ll do well in a worst-case scenario and exceptionally well if things go to plan."

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