TLS - Telstra Corporation

Uncle Festivus · 6 March 2009

I think TLS is sufficiently oversold today for me to have my first purchase since I sold my T2 all those years ago. In at 315. When cash is king, TLS is still a cash cow? P/E & div yield looking mighty attractive, as long as it's maintained. Anyhow, so far a good whip/flip trade? Will they be left out in the cold with the NBN, will it even go ahead in this climate?

malachii · 6 March 2009

I thought they were oversold as well so I picked up a chunk. Think we'll see a bit of a rebound fairly quickly as despite all their problems - they are still have a pretty safe dependable cash flow. Also think a lot of the drop in price was because of Sol announcing he was leaving. I think the market will get over that pretty quickly especially when they announce his replacement.

malachii

PS Please note I own TLS so my opinion is VERY biased!!

bloomy88 · 6 March 2009

jancha said:
Lot of nervous investors out there. Div day and TLS down 6%. Wonder what their share price will be come Monday?

Telstra's SP was down 13c today but it payed out a dividend of 14c. In theory though the SP of a company should drop by the dividend amount, since in theory SP is the present value of expected dividends in the future.

In short, SP went down 13c but paid dividend of 14c so in theory the SP went up by 1c. The drop in SP today shouldn't worry shareholders too much i would think

hem9 · 6 March 2009

G'Day Mates

New to the site, posted in the introduction forum already and hoping to get some valuble wisdom from you experienced investor types.

Got a small amount of money to make my first investment and I have been doing a lot of research on Telstra (since I am using the service), and from what i gather from this forum its not a popular stock.

From doing my homework I thought todays share price would be a great buying opporunity for the following reasons:

1. TLS is cashed up and in this market thats really important
2. I think if any company can survive this downturn it would be TLS
3. Like Woolworths it is a defensive stock and for reasons 1 & 2, but unlike Woolworths in my opinion it is quite cheap (made a new low cause of the ex dividend and the share price is cheaper than other stocks which may or may not survive this recession/depression.
4. With regards to Growth, TLS is supposed to be the leading telecom in Aus and I read that the Gov would have to pay TLS to use its infrastructure in going forward with the NBN and TLS bought some companies in China and I read somewhere they are going to try to penetrate that market.
5. The dividends would be more secure in comparison with other companies and the yields are not bad.
6. If we are coming out of the recession then I could understand that money would be moving to growth stocks because TLS do not have rapid share movement but from all indications and what i have heard from the news that the recession is only going to get worse and "we ain't seen nothing yet" as stated by some economists, so I would think that TLS would be a good stock because of reasons 1,2 & 3.

If anyone can give a newbie some insightful advice on why TLS is either a good stock or bad stock, it would be most appreciated.

Sorry for the long read and thank you in advance

oldblue · 7 March 2009

Hi, hem.

Now this is not advice because posters are not permitted to give advice. So it's just my opinion or as they say here, IMO.
Personally I'm not a great fan of TLS. Main reasons are the heavy capital cost of ongoing development and the potential for govt intervention/regulation. I realise that any messing with TLS would risk alienating the affections of voting shareholders but if the crunch came I wouldn't want to take the risk that the interests of the relative few would be favoured over those of the majority non-shareholders. Not saying it would happen but the world of telecoms is littered with govt interventions.

In favour of TLS is that it is a steady earner with a great yield and selling at a reasonable P/E for today's conditions.

You will be aware of the need to diversify your investments, ie not to put all your eggs in the same basket/company. That's easier said than done of course and one has to start somewhere/funds are limited. The classic solution has always been to start with a managed fund which spreads the risk for you. I'm not a fan of that, preferring to take and stand by my own decisions.

Happy investing!

hem9 · 7 March 2009

oldblue said:
Hi, hem.

Now this is not advice because posters are not permitted to give advice. So it's just my opinion or as they say here, IMO.
Personally I'm not a great fan of TLS. Main reasons are the heavy capital cost of ongoing development and the potential for govt intervention/regulation. I realise that any messing with TLS would risk alienating the affections of voting shareholders but if the crunch came I wouldn't want to take the risk that the interests of the relative few would be favoured over those of the majority non-shareholders. Not saying it would happen but the world of telecoms is littered with govt interventions.

In favour of TLS is that it is a steady earner with a great yield and selling at a reasonable P/E for today's conditions.

You will be aware of the need to diversify your investments, ie not to put all your eggs in the same basket/company. That's easier said than done of course and one has to start somewhere/funds are limited. The classic solution has always been to start with a managed fund which spreads the risk for you. I'm not a fan of that, preferring to take and stand by my own decisions.

Happy investing!

Thanks for your expressing your views and at least I learned more about the stock, I guess in this kind of market if possible government intervention is the largest possible problem then I guess it is not so bad.

Rainmaker2000 · 7 March 2009

Hey Hem9........as a relative newbie, you may not go far wrong with TLS but in this market, there are some incredible stocks which are superior to TLS and the market has dealt with more harshly.........if you can believe TLS has been one of the better performers in the last year.......

I probably reiterate the comment below....you may just want an index managed fund or something.............if you want to become a great invester, then learn a lot and stay away from any of the so-called wisdom you read in newspapers and magazines

For example: TLS is not cashed up but actually has quite a bit of debt, but not too much................there is really no such thing as a defensive stock, your best defense is a stock that grows earnings quicker than another..........dividends matter little compared earnings and free cash flow......

The best stocks in whatever economic climates are the stocks that are growing earnings quickly and selling at a relatively low valuation.........TLS does not excel on either count but is not a dunce all the same.....

hem9 · 7 March 2009

Rainmaker2000 said:
Hey Hem9........as a relative newbie, you may not go far wrong with TLS but in this market, there are some incredible stocks which are superior to TLS and the market has dealt with more harshly.........if you can believe TLS has been one of the better performers in the last year.......

I probably reiterate the comment below....you may just want an index managed fund or something.............if you want to become a great invester, then learn a lot and stay away from any of the so-called wisdom you read in newspapers and magazines

For example: TLS is not cashed up but actually has quite a bit of debt, but not too much................there is really no such thing as a defensive stock, your best defense is a stock that grows earnings quicker than another..........dividends matter little compared earnings and free cash flow......

The best stocks in whatever economic climates are the stocks that are growing earnings quickly and selling at a relatively low valuation.........TLS does not excel on either count but is not a dunce all the same.....

Thank you for sharing your views, that is why I joined this forum because of you guys very insightful opinions. With regards to your comments, all I really have to learn with is magazines and newspapers. I guess when I mean defensive I mean that it has not fell as much as other stocks and the sector is not traditionally affected by the slow down. In my opinion, based on the climate growth stocks have lost at the very least 50 - 95% and since the immediate future looks worse I am kinda scared to place my money in growth stocks such as financials, real estate and maybe airlines. I guess if the "recession" was ending I would be braver.

I also think that the valuation for a "defensive" stock such as TLS is not too bad since turning ex dividend the share price is in its lowest price for 12 years from what I heard.

oldblue · 8 March 2009

I'm not really a Technical Analysis type but if there's one lesson I've learnt, at great expense, over many years of investing it's not to buy a share because it's trading at a 52 week low, an xyears low, or an all-time low.
I've achieved much better results from exercising a bit of patience, not being tempted to " pick the bottom ", and waiting for some strength to be shown in an uptrend in the shareprice.
In fact, taking a hard look at stocks that make new 52 week highs, perhaps taking a small position and then buying into further strength has often proved to be a profitable strategy. After all, SP movements merely reflect the combined knowledge and sentiment of market participants, some of whom will know a lot more about a particular stock than I do. All this is subject to doing my own research and analysis but TA is a useful tool to overlay on my results.

Just IMO!

Rainmaker2000 · 8 March 2009

Hem9, I get the impression you are excited and interested in stocks.......which I think is awesome.......I doubt I would have any success in market if it was not a massive passion......

Australian Financial Review or BusinssSpectator website are great sources>>>>>books are the best however

Try Common Stocks, Uncommon Profits by Philip Fisher........he was arguably the inventor of the 'growth stock'........but of course he did not call it that..he just wanted to describe the best stocks...that is a term others have used and abused..

There are no blue chips either.......every company and even stock is unique.....and that is why people can make heaps on money on the market by knowing the differences..........not just between sectors but stocks

Example of stock at moment: my favourite salmon farmer has more than halved in price since correction.........it is on track for lifting earnings by 40% this year, after a good half year, after lifting earnings for the last 4 years and it has detailed plans to lift earnings every year out to 2015..........it may be a 'growth stock' but really, they grow salmon, kill it, sell it, people eat it

hem9 · 8 March 2009

Thanks guys for helping a guy down on his luck and for sharing, will act on all your insightful "opinions".

oldblue · 8 March 2009

Getting well off the subject of TLS here but Rainmaker's favourite salmon farmer sounds very much like Tassal - TGR - to me. I have it on my watchlist too. SP is well beaten down so I would like to see a bit of an uptick before buying.
Also of interest is TGR's biggest shareholder, Websters - WBA - who hold 25.9% of TGR with a market value of $65.6m. Now WBA's own market capitalisation is only $38.7m which would appear to make them extremely attractive! The problem is that WBA is a small, thinly traded stock, also trading in a bit of a rut. It's also on my list for signs of an upturn in the SP but extra caution is warranted, IMO, due to its small size and limited marketability.

Rainmaker2000 · 8 March 2009

hehe, your onto me Old Blue....not very vague..my understanding there are only two Salmon farmers in Australia now......Huon is unlisted and Tassal fills out the comfortable duopoly

Unlike TLS, the regulators care very little about Tassals massive market power....practically owning the domestic supply of Aussie Salmon....and now having a stranglehold on import supply into this market......and cause they are now apparently Tasmanias 2nd largest private sector employer, the Tassie government seems to be bending over backwards to consolidate their market power even further.......

jancha · 11 March 2009

TLS is getting hammered. Big sellers & not so big buyers. I thought this would have been a relative safe share at 3.30! Any thoughts on why the down trend? News of a super fast broadband & the costs?

brianwh · 11 March 2009

Suggestions by posters on another forum that short sellers are at work. Is there somewhere you can access a list of big sellers and or big stock lenders?

vincent191 · 11 March 2009

According to the list provided on the ASX website, only 15% of TLS turnover is due to short selling. It is a bit higher than usual. I am not saying that this is the cause for the tumble in the SP, I am only responding to the above posting.

Uncle Festivus · 11 March 2009

brianwh said:
Suggestions by posters on another forum that short sellers are at work. Is there somewhere you can access a list of big sellers and or big stock lenders?

That's good - they have to buy them back some day, 62M gone through today!

joeyr46 · 11 March 2009

jancha said:
TLS is getting hammered. Big sellers & not so big buyers. I thought this would have been a relative safe share at 3.30! Any thoughts on why the down trend? News of a super fast broadband & the costs?

been a downtrend for years just not as steep as some, usually has something to do with reality Technically it broke out of a big consolidation a few weeks ago and whilst it may bottom anywhere I'd like to see a bottom form probably take a good while but could rally sharply with all the short sellers

jancha · 16 March 2009

Hi Old Blue,
You were saying that you would look for a sign of an up trend in order to buy into a particular company. Unfortunately I've been buying TLS on the way down & now find myself in a position where im stuck with them or sell at a loss. I've noticed of late that when TLS shares have gone up in sp on moderate buys it gets to a certain rise only to be hit with larger volumes of sells to fall back down. This suggests to me that the sp will eventully fall further. Would you agree with this line of thinking or does short selling come into the equation? If so could you explain what & how short selling works? As i'm day trader with not much experience i'm considering in selling at a loss on the basis of the large sells. As I'm fairly new at this your opinion would be appreciated.

oldblue · 16 March 2009

Hi jancha.

I'm no expert on short selling - which involves borrowing shares and selling (shares you don't own) in the hope/expectation that the price will fall and that you're able to buy back at a cheaper price. I don't have the temperament for that.
Also I don't really give more than a passing nod to Technical Analysis, except to check from the charts that anything I'm interested in isn't trading in a downtrend. It's taken me a long time to learn not to buy in those circumstances - trying to " catch a falling knife " - with a very poor chance of getting the timing right.
As far as Telstra is concerned, it doesn't appeal to me right now, for various reasons. Having said that, it's a strong company with a dominant position in its industry and paying a good div. If I held them I wouldn't be selling.

TLS - Telstra Corporation

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