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James Li
James Li
Articles (1492)  | Author's Website |

4 Global Telecom Stocks With Strong Margin Growth

Stocks to consider as families around the globe wish people happy holidays

As the coronavirus pandemic continues spreading around the globe, families are wishing each other happy holidays, including Christmas and Hanukkah, through mobile phone and communication platforms like Zoom Video Communications Inc. (NASDAQ:ZM). According to the All-in-One Screener, a Premium feature of GuruFocus, four global telecommunication services stocks with strong margin growth are Rogers Communications Inc. (NYSE:RCI)(TSX:RCI.B), TELUS Corp. (NYSE:TU)(TSX:T), Elisa Oyj (OHEL:ELISA) and Turkcell Iletisim Hizmetleri AS (NYSE:TKC)(IST:TCELL).

Health agencies around the globe enact shelter-in-place orders

U.K. Health Secretary Matt Hancock said on Monday that British authorities "had identified a new variant" of the Covid-19 virus that may be linked to an acceleration of cases in southern England, though nothing suggests the new variant is likely to cause serious infection or fail to respond to a vaccine. The U.K. placed London on the strictest tier of coronavirus restrictions until Wednesday on the heels of the new virus strain.

According to Johns Hopkins University statistics, global cases topped 73 million with over 16 million cases in the U.S. The Centers for Disease Control and Prevention underscored on its website that the safest way to celebrate the winter holidays is to celebrate only within people living in a household.

As people resort to telecommunication to wish distant members of the intermediate family, investors can find good opportunities in margin-growing stocks within the telecommunication services sector. The "Margin Growth Screen," which is discussed in the GuruFocus Screener World Travels video series, seeks to find stocks that meet Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio)'s investing strategy of "good companies at fair prices."

The Screener identified four telecom stocks based in Canada and European countries with positive five-year operating margin growth, a GuruFocus business predictability rank of at least two stars and a price-to-GF Value ratio between 0.6 and 1.1.

Rogers Communications

Shares of Rogers Communications' U.S.-based shares traded around $47.21, showing that they are fairly valued with a price-to-GF Value ratio of 0.98.

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GuruFocus ranks the Toronto-based wireless service provider's profitability 8 out of 10 on the back of a 4.5-star business predictability rank and an operating margin that has increased approximately 4% per year on average over the past five years.

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Gurus with holdings in Rogers include Jim Simons (Trades, Portfolio)' Renaissance Technologies and Mario Gabelli (Trades, Portfolio)'s GAMCO Investors Inc. (NYSE:GBL).

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TELUS

Shares of TELUS' U.S.-based shares traded around $20.06, showing that the stock is fairly valued with a price-to-GF Value ratio of 1.05.

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GuruFocus ranks the Vancouver, British Columbia-based company's profitability 8 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that is outperforming over 71% of global competitors.

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Elisa

Shares of Elisa traded around 44.81 euros ($54.44), showing that the stock is fairly valued with a price-to-GF Value ratio of 1.09.

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GuruFocus ranks the Finnish voice and data service provider's profitability 7 out of 10 on several positive investing signs, which include consistent revenue growth and an operating margin that has increased approximately 2.2% per year on average over the past five years and is outperforming over 83% of global competitors. Despite this, three-year earnings growth rates are underperforming over 51% of global telecom companies.

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Turkcell

Shares of Turkcell's U.S.-based shares traded around $5.07, showing that the company is fairly valued with a price-to-GF Value ratio of 0.92.

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GuruFocus ranks the Turkish mobile phone service provider's profitability 8 out of 10 on several positive investing signs, which include consistent revenue growth and an operating margin that has increased approximately 3.5% per year on average over the past five years and is outperforming over 83% of global competitors.

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GuruFocus ranks Turkcell's valuation 10 out of 10 on the back of price-earnings, EV-to-Ebitda and PEG ratios outperforming over 85% of global competitors despite a share price near a 10-year high and price-book and price-sales ratios outperforming just over 52% of global telecom companies.

Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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