Today I want to discuss a UK-listed company called Telecom Plus (TEP), who are basically a utilities company that offer discounted prices on a range of services such as home and mobile phone, internet, gas and electricity.

The reason I mention this company is because not only is the share price starting to look oversold, but the company itself also pays a very handsome dividend, which is particularly beneficial at the moment with interest rates being so low.

Indeed just looking at the dividend alone, at the current price of 273.25p we get a yield of 6.4% for the current year and a forecast yield of 8.1% for 2010 and 9.7% for 2011.

So it’s potentially a great buy for dividend investors but it does also offer growth potential as well because although earnings are forecast to drop slightly next year (according to recent analyst forecasts), they are predicted to rise sharply again in 2011. In my opinion Telecom Plus’ discounted services will continue to be in high demand with gas and electricity prices continuing to go up at an alarming rate.

Finally on a technical basis both the CCI and stochastic indicators are in oversold territory and the RSI is approaching oversold territory so there is lots of scope for short-term gains as well, particularly with the shares going ex-dividend next month.

So overall although I don’t currently hold any shares in Telecom Plus at the time of writing, I do think they are a great investment both for short-term and longer-term investors.

 

 

Filed under: UK Stocks

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