Overseas Wireless Stocks Are Better Bets.

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April 2, 2009

Wireless stocks have been on my radar more than usual of late, mostly because they’ve been going higher while the rest of the market has been, shall we say, a little less reliable? The S&P 1500 Wireless Index is up about 40% since the beginning of the year, versus the market’s decline of 10% despite the recent rebound. Normally I’d worry about an inverse relationship when the overall market is falling - when the broad market starts to rise, the group in question starts to fall. In this case though, the wireless stocks have continued to rise.

I bring it up as a foray into my recently-posted Investopedia article “Wireless Stocks Won’t Stay Tied Down“, which pinpoints some of the specifics of why and where the industry is doing well. Namely, I mention that foreign wireless carrier stocks are really attractive right now (for good reasons). The stocks I look at are China Unicom (CHU), Mobile Telesystems (MBT), TELUS (TU), iPCS (IPCS) and Telemig Celular (TMB), with a specific look at the P/E ratios.

Now, what I didn’t say in the article….

The challenge in writing for Investopedia is that I can’t use graphics (and charting is a major part of my investing strategy), and Investopedia likes to adhere to a strictly fundamental approach. Fine, but the fundamental snapshots can’t quite explain what’s so attractive wirless stocks are right now, or why. The nearby chart can do both pretty quickly.

Wireless Stocks

The S&P 1500 Wireless Index fell 83% between its 2007 and its 2009 low…. a ridiculous and undserved beating. The market seems to have figured out the error though, and is making up for lost time. Many of thse companies sailed through the recession without a second thought, and without giving up any revenue of earnings. It’s the chart, however, that got my attention - look at the dip, and then look at how firm the last few weeks have been.

Anyway, I’m adding one of these foreign wireless stocks to the official BP portfolio.

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