Our Outlook for Media and Telecom Stocks
Stability looks attractively priced in telecom; old media is still fading.
What goes up in the financial markets doesn't necessarily have to come down, but bumps along the way are inevitable. Last quarter, we noted several non-U.S. telecom stocks that we believe offer an attractive way to offset the impact of a falling U.S. dollar and a weak U.S. economy. Of course, the greenback has strengthened since then, punishing the ADRs of most non-U.S. telecom firms. We believe giants BT (BT) and France Telecom (FTE) will provide fairly stable cash flows, even if weakening economies across the U.K. and Europe pressure growth, thanks to the defensive nature of the telecom business. Both stocks offer solid value and a nice way to diversify a portfolio with heavy U.S. exposure. We also see lots of opportunity to invest in businesses that will benefit as an increasing percentage of the world's population adopts wireless phone service. America Movil (AMX), for example, enjoys a dominant position in its home market, providing some stability, and exposure to countries around Latin America.
Michael Hodel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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