Hellenic Telecom: One to Watch

09/17/2015 10:00 am EST


With China stalled, where do global investors look for growth? asks Paul Goodwin, editor of Cabot China & Emerging Markets Report.

One candidate we’re following is Hellenic Telecommunications Organization (HLTOY).

This Greek telecom provides fixed-line voice, broadband, data and leased service, plus TV and mobile service in Greece and Romania, plus mobile service in Albania.

The company got 54% of its 2013 revenue from fixed-line service, but that has dropped below 50% in the latest quarterly report.

With a market cap of $4.6 billion and annual revenue of $4.56 billion, Hellenic Telecom sports a profit margin of 4.6% over the trailing twelve months.

The company has total cash reserves of $1.26 billion and its stock pays a dividend with an annual yield of just under 1%.

HLTOY went through a great rally in the second half of 2012, soaring from penny stock territory ($0.71) in June 2012 to $9 in March 2014.

But at that point the Greek liquidity crisis began to dominate investors’ thinking and this year the stock has put in a triple bottom.

We’ve since seen three dips to support at $3.60 in April, June, and August. The stock’s beaten-down price has improved its P/E ratio to 16.

With the Greek crisis splinted and bandaged (at least for now), HLTOY has shown signs of a rally, with increased trading volume and a rising share price during August, when its price has jumped from $3.60 to $4.70.

This is a thinly traded issue, but the fact that Deutsche Telekom (DTEGY) has a 40% stake in the company is a good sign.

HLTOY has a high potential for advancement if it can get fuel from more good news on the Greek bailout front.

We are watching the stock for an opportunity to buy. For now, we are keeping the stock on our watch list.

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