Wednesday, April 25, 2012

Telefonica A Long-Term Buy

Shares of global telecom giant Telefonica (TEF) have been decimated lately as most Spanish stocks (even those cross-listed in the U.S. like Telefonica) have taken a beating due to the economic crisis in Spain. But while Spain does suffer from a recessionary environment and an unemployment rate of 23%, the market has likely overreacted when it comes to Telefonica: its shares are down 43% in the last year, even though only 30% of the company's profits come from Spain, whereas over half of the company's profits come from a healthily growing Latin American market.
Read more...

6 comments:

Anonymous said...

Read your article at SA too.

But what are tax issue with TEF for Cdn investors in their TISA accounts.

Since TEF is an adr, currency fluction is one, another is tax witholding in the U.S. etc.

Please highlight all the issues for Cdns. Thanks

I also own NLY in my TIFSA and haven't done anything with U.S. tax witholding

Anonymous said...

Great article. Have you looked at France Telecom (FTE)? Very similar chart & dividend, largest telecom player in the neighboring country...

If so, why do you prefer TEF to FTE? Just curious...

Anonymous said...

Buy in your RRSP, not your TSFA. That is the way you can avoid the ding on your yield.

Anonymous said...

Buy in your RRSP to avoid US witholdings.

Saj Karsan said...

Hi Anon2, I'll post my thoughts on FTE soon.

Saj Karsan said...

Hi Anon2,

Though FTE does also look undervalued, I worry a bit more about its risk exposure to its largest market. As discussed in the article, I believe regulatory impacts can be large in this industry, and therefore I prefer a company that is well-diversified by geography

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