International Monster: Turkcell Iletisim Hizmetleri AS (TKC)
Monster stock Turkcell is a provider of communication services. I say monster because of their market cap which is 21 billion. They sell wireless phone subscription and internet internet access. They have the right combination of a few things I pay close attention to in a large company. First, they generate a lot of free cash flow. Management is growing shareholder equity. The balance sheet is strong and the stock has sold off while the fundamentals are still strong.
They have been growing fast recently and the stock took off. Though, It has sold off 20% since late December of last year. Earnings are not expected to grow as fast as before but are expected to grow 14% every year over the next five. At $24 the stock currently sells for 11 times 2008 earnings. The earnings and predictable cash flow growth coupled with a wide moat make the stock an interesting possibility. As Turkey's largest mobile phone company and with business in Asia and the European region they are positioned to take advantage of rising incomes in these countries.
The stock has risen as earnings have grown. Wall Street likes predictable earnings growth. The stock might get cheaper but because of the companies strong competitive position, solid fundamentals and rising earnings the stock will likely see new highs over the coming years.
disclosure: no position in TKC
- Mark Perkins's blog
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Turkcell
I would like to comment on this stock since it is from my home country Turkey. I can assure you that Turkcell is pretty much unbeatable in the Turkish market. There are other brand names that are gaining popularity but one thing that matters to the public in Turkey is brand name and familiarity. When cell phones first came into play, there was no other company than Turkcell, they enjoyed a monopoly for many years. Therefore, Turkcell is the brand that people are most familiar with even though the market is now getting crowded.
Turkcell also keeps its popularity by advertising on TV, during soccer games, and on billboards. These three venues are probably the most important ones for advertising in my country. Even the soccer league is called Turkcell Super League. I believe that this stock will keep its impressive growth for years to come and even if the growth in the Turkish market may slow in the future (in Turkey, there will be soon more than one cell phones per person), they will gather growth from Central Asian countries that they're investing in. I just wanted to make these points in addition to the earnings and cash flow estimates submitted by Mr. Perkins.
Mehmet Yavuz
Disclosure: No ownership in TKC and no personal relationship with the company or its management.