On Tuesday March 6th the market finally put on the brakes and offered buyers an opportunity to pick up a few shares of companies on their watch list. Even though I’ve been investing in cash for the last few months I did have some cash set a side for the purchase of any stocks that might meet my buy criteria. What is The Stoic Investor looking at these days? VOD and PEP are high on the list of new additions I would like to add to my portfolio. ATRI and NPK are a couple of small caps that have experienced quite a bit of price depreciation in the past few weeks that I would like to add as well. However, none of these were actually my buy candidate on Tuesday. Nope, I went with a company I already own. The hated or loved: TEF.
I’ve listed in a previous post why I’m an investor in TEF for the long-term. Those reasons still stand and with it dipping to a new low on Tuesday I picked up a few more shares. This represents my second purchase of TEF shares and I was able to add 215 shares at a price of 16.36. TEF now represents my second largest holding and unless there is another substantial drop in its price I will probably hold steady with the 575 shares I now own.
TEF is either a value play or a train wreck waiting to happen. Although it has substantial debt that makes it less appealing even for a telecom, it has a geographical diversification that I find appealing in a rapidly growing region, South America. It is my belief that the market is punishing TEF for its domestic market, Spain, and the 22.8% unemployment experienced in that country and discounting the growth prospects in its largest market. Combine a horrible economic picture in its home market with substantial debt and a recent dividend cut and you have a stock that is taking a beating in the market. Clearly it is not without risk and will likely suffer more in the short-term. In the long-term I believe that TEF will turn the corner and provide me with price appreciation as well as a nice dividend. Only time will tell…