Buying Opportunity In Telstra

This story features TELSTRA GROUP LIMITED. For more info SHARE ANALYSIS: TLS

By Michael Gable 

The local market once again appears to be trying to establish a short-term low, but still failing to follow through on any rallies. Once we have a positive day, we tend to spend the next day in the red. We’ll need to string together a few positive days in a row for confidence to come back. We have noticed the buying starting to come back into the banks. As suspected, the ex-dividend dates in early November will prove to act like a magnet and should ensure that share prices have a bit of a floor for the rest of October. Our strategy for bank shareholders remains finding an opportunity to write a covered call on a rally, before the stock goes ex dividend.

Today we discuss an opportunity in Telstra Corporation ((TLS)).
 

Our previous look at TLS was on 1 July where we suggested a rally from the bottom of the range leading into the ex dividend date in August. So from $5.21, TLS rallied higher and closed at $5.74 before going ex dividend. Once again, the stock is at the bottom of its range. There appears to be some support here and we may now get a bounce in TLS towards $5.50. However, the next dividend isn’t due until February, so we do not have the prospect of an upcoming dividend to keep the share price well supported. So, after bouncing here in the short term, we could see TLS then dip down to support in the $5.10 – $5.20 range. That would be an even stronger buying opportunity, putting TLS on a yield of about 6.0% plus franking.

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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