The Share Centre adds Telecom Plus to its ‘buy’ list

Graham Spooner, investment research analyst at The Share Centre, explains why Telecom Plus is attractive to medium risk investors looking for a balanced investment.

“Utility provider Telecom Plus has reported consistent positive results this year with the latest update in October stating trading to be in line with expectations. Earlier in the year the company reported a 25% rise in adjusted profit alongside a 15% increase in new customers. Most importantly the proportion of customers taking the entire package of services doubled, which in turn improves the visibility and quality of earnings.

“We have added Telecom Plus to our ‘buy’ list for medium risk investors seeking a balanced investment. The share price has declined by around 30% this year reflecting the trend in mid cap growth stocks, therefore presenting investors with a more attractive entry point.

“The group provide an alternative to the usual well known utility suppliers for gas, electricity, telephone and broadband services. Compared to its competitors the forecast revenue for the year of around £800m is tiny, but set to grow through its Utility Warehouse brand. The group's past growth record and strong return on capital profile has not gone unnoticed and has resulted in a premium rating relative to the sector. A prospective PE of 19 falling to 16.7 for 2016 may look rather high, but this is one of the few companies that can expect significant earnings growth along with market share and customer numbers.”