One of my favourite value investing sites is The Value Perspective which is the web outlet for some of the (value) fund managers over at Schroders. In their latest piece, Andrew Lyddon talks about how the telecoms sector is not exactly a hot favourite. Despite the sectors deserved reputation as a defensive play, share prices often fallen and lagged far behind the wider market and even other defensive sectors.
Andrew comes to the same startlingly obvious conclusion that I did when I recently invested in Vodafone. 10 years ago, telecoms companies were horrendously overvalued as part of the dot com bubble. Over the years since 2000, their prices have come down even as the actual businesses have grown. Every year, as these companies grow and as their share priced fell further, they became better value.
At some point, they become good value. For Vodafone, I think that time is now. But for many investors, they will just look at the share price and how it has gone down for years and think that Vodafone is anything but a good investment.
Going against the tide may be hard, but it’s the bread and butter of successful value investing.
Look at france telecom, much cheaper
Hi Shlomi. I can’t comment on France Telecom as it isn’t available from my data provider, but if they’ve got a good history of growth and a good earnings/dividend yield then you may well be right.
There are plenty of value opportunities out there at the moment.
[...] Why a falling share price is often a good thing [...]
I think a falling stock price is a good thing for another reason, too: I simply hate it, if the stocks that I own rise, especially if there are no good alternatives to invest.
I feel much better if I know where to invest the money I save every month, than when stock prices rise more and more and I am hoarding cash.