Since then the stock pulled back by over $12 to just under $70 a share. It closed on Friday at $73.82 and I think it's time to buy it again.
The company recently announced that profits surged 22% in the latest quarter but there was a sale of assets which distorted those earnings somewhat.
However, the stock is trading at a P/E of only 10 times and has a dividend yield of 6.1%.
The company has some challenges particularly in Venezuela. That wacky country has devalued its currency and, given its hyperinflationary economy, the move will cost Telefonica over €545 million in net profit in 2009. Also, Telefonica's home country of Spain is not without challenges and is thought to be lined up behind Greece for a possible bailout by the European Community. To add to the bad news, Telefonica was recently outbid by Vivendi for the Brazilian telecommunications company GVT.
All that said, Telefonica remains one of most diversified companies in the sector with less than 40% of its revenue coming from Spain and more than half its profits come from outside Spain. There's also a good chance they will acquire Telecom Italia which will strengthen its position in Brazil where the two companies have extensive operational overlaps.
The stock is far from a slam dunk but a low P/E and a high dividend combined with a strong Latin American presence make it a bet worth taking for aggressive investors.
Action now: Buy with a price target of $83.
Disclosure: Author holds a long position in TEF