According to research firm FactSet, telecom stocks are supposed to have the strongest earnings growth in the second quarter of the year. FactSet specifically mentions Verizon (VZ) as the largest contributor to the sector’s anticipated growth. Investors who read that might be tempted to just run out and buy shares of the telecommunications giant — but that would be a mistake.
If you take the time to use Portfolio Grader to do your homework and dig deep, you will find that Verizon is just an average choice right now. The stock was just upgraded to a “Hold” last week after being ranked a “Sell” for the past few months. But never fear — there are much better opportunities among telecom stocks for investors who want to own fast-growing telecommunications companies.
FairPoint Communications (FRP) provides telephone service, broadband, television and internet services in northern New England. It also owns 16,000 miles of fiber-optic cable in the region and resells DirectTV (DTV) content to its customers. The company has been experiencing solid growth with earnings up 33% so far this year. FairPoint has posted monster positive earnings surprise in two of the past four quarters, and analysts have been raising their estimates for the rest of 2014. Last Week Portfolio Grader upgraded FRP stock to an “A” — the stock is a “Strong Buy” at the current price.
Intelliquent (IQNT) overs voice telecommunication services on a wholesale basis in the United States. Intelliquent’s IP-based systems allow customers to exchange traffic between local and long-distance across networks and are sold to telephone and cable companies. Intelliquent has posted four consecutive positive earnings surprises and profits are up more than 200% in the past year. Wall Street has been raising estimates for this year and next as well. Portfolio Grader noted the fantastic fundamentals back in November and upgraded IQNT stock to an “A” –Intelliquent remains a “Strong Buy” today.
Shenandoah Telecommunications (SHEN) provides telecom services to customers and other telecommunications companies in the southeastern United Sates. Shenandoah also offer wireless services in Pennsylvania, West Virginia, Virginia and Maryland. The cable television segment of the business serves customers in Maryland, Virginia and West Virginia. Earnings are up more than 70% in the past year and the company has posted four consecutive positive earnings surprises. SHEN stock was upgraded to a “B” by Portfolio Grader back in November and remains a “Buy.”
There are indeed some high-growth opportunities in telecom stocks, but investors need to ignore the headlines and use our powerful stock-picking tool to find those companies with the very best fundamentals and prospects.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth,Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.