Last winter saw telecom stocks in the doldrums. The Dow Jones U.S. Telecommunications Index is down about 16 percent year-to-date. But out in the boondocks, where neighbors are more than a holler away, rural telecoms must be more prudent in expanding due to the high cost of acquiring customers relative to urban markets, says Dave Mock, an analyst for The Motley Fool. Therefore, those publicly helds seem a sensible play.
“Many rural telecoms are currently paying significant yields and have low P/E ratios to boot,” says Matthew Conrad of Complete Wealth Management.
Citizens Communications (NYSE: CZN; Price: $10.79) scores high on “managing costs while keeping the focus on the customer,” Mock says. Conrad likes Citizens and Windstream (NYSE: WIN; Price: $12.06) for long-term investors.
Windstream, he points out, had a yield of 8.3 percent, and its stock price is down 7 percent year-to-date at press time. Citizens had a yield of 9.2 percent as its stock price had slipped 15 percent year-to-date. Both companies have stock buyback plans.