Telecom Plus
Shares: 184p +28p
Questor says Buy

Tory party backer Charles Wigoder must have felt truly blue earlier this year when shares in his residential telecoms and energy supplier fell below 100p for the first time in almost four years. In early 2004, Telecom Plus - in which Wigoder has a 20pc stake - had peaked at 400p. But a failure to hedge its gas supply contracts caused the stock to tumble as the gas price soared.

Then came the explosion of competition in the broadband sector led by that "free" offer from Carphone Warehouse. It is easy to see why investors got spooked. Since this summer, however, Telecom Plus has staged a modest recovery. Yesterday it got a fresh fillip as Wigoder promised record profits in the current year.

NPower has taken over Telecom Plus' energy-buying operations, along with an option to buy management's 29pc stake in 2009 at a price based on a set formula.

Based on analysts' earnings expectations NPower's strike price would be somewhere near 300p, which would represent an impressive return over three years.

The arrangement makes Telecom Plus pretty much bid proof for now but shows that NPower has confidence in the low-cost business model pioneered by Wigoder, who built Peoples Phone into a sizeable mobile phone service before cashing in millions by selling it to Vodafone in 1996.

Telecom Plus owns no network but buys in bulk and seeks to undercut larger rivals. Not only does it not have to build or repair switches and pipes, but it sells through agents and sub-agents so it has minute marketing costs - customers are given incentives to win new business from friends and family.

On 15 times forecast earnings, falling below 12 for 2008 and yielding 2.6pc, there is room for upside.

Whitbread

great in it

Have a look at the five year chart (didn't manage to past it!). TEP reached 400p just over 4 years ago. They fell from grace with rising energy costs which they had not hedged. They are far stronger now. A key point is that they are the only inclusive supplier of energy and telecom services. They are content to achieve a given % of sales value so are not seeking to make the quick kills that so many in the energy market are. Their sale people are on a franchise basis so there are no fixed costs there. I think it is onward and upward for a long time to come.

Eric

Still hold maestro...?

Came across todays trading update which is worth a look. The company seem to be benefit from the economic environment as customers look for cheaper utility deals. They also have plenty of cash 36.8m, and seem very bullish about growth going forward.

The sp has held up well since the trading update on Tuesday, when you consider the weak market. An interesting point is the statement saying they are looking to double the workforce during the next 3 years. How many other companies are doing this in todays environment?

Finals are due 20th May with estimates of 25p EPS which gives a PER of 13.3p, which may seem high given todays average PEs. But business that thrive in a recession are hard to find now. Anyway I have brought in, and will keep a tight stop in place. Hoping to see a steady rise upto results, may even see some upgrades from the brokers, or comment in the press.

Can't get excited about this one at all....sold out at a small loss...after results....where is the growth going to come from ?, only by acquisition it seems ! the sp at the moment is being supported by that dividend...take that out of the equation and I reckon the sp would plunge !, this company has got to be at a stage where I can't see it getting any bigger, I mean : "telephone and electricity" by word of mouth ?, that will only go a certain distance !...I myself don't get it from them...too much competition is what it boils down!...they themselves could be taken over but that's a long distance shot...views welcome !.

rf see post 23 re N Power option then think again!

Thanks, .. I will have a read.

after an 8% drop in sp and a decent dividend in a couple of months, this popped up in my Income screener. Then I remembered my friend was raving about how good it was as he is a customer; (he does not trade shares so has no interest in ramping!) so I think I may go for it - it can't be any worse than BT which sp has stagnated.

This company gives a very good dividend but is it not already priced into the sp ?, because if it is : it will pull back by probably more than the dividend in pence, I remember Amstrad (Sir Alan Sugar's outfit) giving a massive dividend to recompense shareholders only for the share price to drop like a stone after it went exdividend....I would have done better to have sold when it was first announced !.

Interim results due tomorrow.

Missed out on this.....I kept on seeing the sp go up a little thinking...: this won't go any further and now it's at 4 nearly......TW and Robbie Burns are in on this and what an increase....the sp did nothing for a year and then the climb started.....still cannot make out who would want telephone or broadband from these people.....unless their prices are far cheaper than anybody else.....would have to do some checking up on this.....this company gives an excellent dividend.......so I do have regrets not getting some of these.....

Why isn't maestro posting since he started the thread ? did he sell soon after.

The share price is holding up well.

Telecom Plus which trades as The Utility Warehouse, is a utility company with a difference, adding telecoms services to the bundle. It's doing very well, and will report its interim figures on Tuesday -- and it's pre-close statement last month was pretty positive. Profits and dividends have been rising steadily, and the share price has more than doubled in the past two years. And although growth might be slowing a little, it's expected to continue for some time yet.

Tempting opportunity to play the bounce from the 200 DMA.

StockMarketWire.com
Telecom Plus (trading as the Utility Warehouse), expects full year profits expected to be marginally ahead of market expectations for the current financial year.

In an interim management statement to cover the period from 1 October 2011 to 12 February 2012, the Telecom Plus board pointed to a recent acceleration in organic growth; improving customer quality and total Group services up by 51,529 during the quarter to 1,322,168.

The company also confirmed its intention to pay a total dividend of 27p for the current financial year (2011: 22p)

A board statement said: "We have continued to make encouraging progress since the half yearly report issued in November 2011, notwithstanding the usual slowdown in distributor activity over the Christmas and New Year holiday period.

Customer numbers for the first 9 months of the year are ahead by 31,180, and service numbers for the same period are ahead by 151,032. These represent annualised growth rates of 11% and 17% respectively."

TEP TELECOLM PLUS.

Lovely chart breakout and Yes looks like
we have seen the bottom.

Not only that but look at MACD
positive divergence with the SP on the chart
the most bullish of all MACD Buy signals.

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TEP Telecolm Plus..

Good to see strong Broker backing
............

Telecom plus PLC

FORECASTS 2012 2013
Date Rec Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)

Peel Hunt
12-03-12 BUY 30.46 33.22 27.00 33.98 37.54 28.00
N+1 Brewin
05-03-12 BUY 30.20 33.10 27.00 33.50 36.80 29.40
FinnCap
13-02-12 BUY 30.60 32.80 27.00 35.10 35.50 30.00
W H Ireland Ltd [R]
13-02-12 SELL 26.60 27.80 22.00

2012 2013
Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)

Consensus 30.42 33.05 27.00 34.17 36.66 29.09

1 Month Change 0.16 0.19 0.00 0.12 0.21 -0.05
3 Month Change 0.40 0.42 0.01 0.31 0.36 0.11


GROWTH
2011 (A) 2012 (E) 2013 (E)

Norm. EPS 53.33% 10.54% 10.92%
DPS 7.32% 22.73% 7.73%

INVESTMENT RATIOS
2011 (A) 2012 (E) 2013 (E)

EBITDA £28.58m £28.94m £32.43m
EBIT £27.50m £m £m
Dividend Yield 3.46% 4.24% 4.57%
Dividend Cover 1.36x 1.22x 1.26x
PER 21.29x 19.26x 17.36x
PEG 0.40f 1.83f 1.59f
Net Asset Value PS 68.97p p p

Moving up nicely this afternoon.