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

Feck me, maestro actually picked a winner, gotta be a first :)
(Well, not maestro exactly, Questor to be precise)

If you tip as many as maestro your bound to get one right one day.

lets face it he's bound to get one right sooner or later its the law of averages.

Maestro is a fliping genius.

lol

I can't believe that maestro takes the Torygraph. Were his chips wrapped in it or something?

Have you any more pearls of wisdom Maestro O Great One..?

Hats off to Maestro O wise one.

300p sometime.

Breaking higher today on its way to 300p(again)..lol.

Did you see that closing spike...

Breached 300p today .

Have belatedly bought back in; should have been back sooner. Had really good run in 2003 then watched the collapse. However, they are an excellent supplier - increases in energy costs lower than others; I think because they operate generally on a cost plus basis. Volume is increasing with relatively fixed overheads meaning a disporportionate growth in profits. Can't see any reason why they shouldn't proceed to recover 400p. One fly in the oint ment might be a reported buy out option for nPower - anyone shed light on it?

Eric

Have belatedly bought back in; should have been back sooner. Had really good run in 2003 then watched the collapse. However, they are an excellent supplier - increases in energy costs lower than others; I think because they operate generally on a cost plus basis. Volume is increasing with relatively fixed overheads meaning a disporportionate growth in profits. Can't see any reason why they shouldn't proceed to recover 400p. One fly in the oint ment might be a reported buy out option for nPower - anyone shed light on it?

Eric

Welcome back EW 400p sounds great.
Stay away from financials .

EW go to TEP's RNS dated 16th February 2006 which explains the nature of the put option and the sale of Charles Wigoder's and other directors shares to N Power.

Belated thanks. I see Mitzy summarises it in the header. 300p now looks cheap for Wigoder's stake. I expect he has bought additional shares since the agreement which would not be covered; anyone shed light on that? One wouldn't want Wigoder to lose interest as he is an impressive operator.
Eric

Surprised not to see any posts after TEPs excellent results yesterday. Even the tips colums is pushing them. What I particularly liked is the forecast of dividend growth which should stop any price reaction after the recent rise.

Eric

great in it