While Apple (AAPL, quote) and China Mobile (CHL, quote) receive much of the attention in the teleco sector, Hong Kong-based City Telecom (CTEL, quote) has financials and technicals that investors should value to balance their portfolio.
Both Apple and China Mobile are mega caps, with Apple now the most valuable publicly traded company in the world.
City Telecom, by contrast, is a small cap ($493.50 million market capitalization) that provides phone services and broadband internet in Hong Kong and Canada.
Despite its size, however, CTEL has a high dividend yield of 6.04%. Apple’s dividend yield is under 2%, and China Mobile’s is 3.83%. High dividend cultures protect the interests of shareholders, particularly individuals, and phone companies are solid in this regard.
More important than its high dividend yield is that City Telecom has a low price-to-earnings-to-growth ratio of 0.48. Investing legend Peter Lynch considers this to be one of the most important financial ratios for a company. A price-to-earnings-to-growth ratio of 1 is adequate, and lower is better. Apple’s ratio is 0.90, and China Mobile is at 6.94.
City Telecom also has no debt and a profit margin in the double digits, which has already caught the attention of the professional investor community. Now trading around $12.78, the one year mean analyst price target is $18.00.