After scanning seven thousand charts as I usually do every weekend, I've come up with this week's weekly stock pick. The scan produced mostly short-sell candidates this week. The scan did produce a long candidate on a weekly basis that grabbed my attention. Being that it's a pick from scanned weekly data, this pick could take longer to move one way or the other because it was based on weekly chart and quote data, instead of daily data. None the less, picks like this have the potential to earn the most amount of return on investment in the long term.
My weekly stock pick this week is a long position candidate. Tuckcell Telecom (TKC).
TKC Trade Setup
Entry: Buy-Stop $20.25
Take Profit: Leave open and adjust trailing stop-loss on the way up.
Turkcell Company Profile
Turkcell Iletisim Hizmetleri A.S. (Turkcell) is a Turkey-based company active in the wireless telecommunications services industry. The Company offers mobile voice and data services, such as calls, voice and text messaging, Internet access, information, e-mail services, support services and disabled services, over its global system for mobile communications (GSM) network. Turkcell has coverage in all settlements in Turkey that have a population of more than 3,000. As of February 29, 2008, it signed contracts with 573 operators in 197 countries. The Company also signed general packet radio service (GPRS) roaming contracts with 311 operators in 128 countries. Turkcell has 9.9 million subscribers in Azerbaijan, Kazakhstan, Georgia and Moldova through its subsidiary, Fintur Holdings B.V.; 300,000 subscribers in the Northern Cyprus, and 7.6 million subscribers in Ukraine through its subsidiary, LLC Astelit. The Company has also been listed in New York Stock Exchange since July 11, 2000.
Turkcell Fundamental Information
Turkcell has about 57% market share as of December 31, 2007 in a 3 telecom operator environment, and by far has the strongest operator in brand image, customer satisfaction, network coverage and profitability. Turkcell offers exposure to six other high growth markets with additional population of approximately 80 million on top of sizable 70.6 million people in Turkey, with strong operational & financial performance with its large subscriber base and high margins. Turkcell has revenues of US$6,328.6 million, EBITDA of US$2,627.1 million and net income of US$1,350.2 million for the year ended December 31, 2007. As of December 31, 2007 its number of subscribers has reached 35.4 million, and is the only company in Turkey with NYSE listing as a result complying with Sarbanes Oxley as well as local capital market requirements. Turkcell has superior advantage against its competition in terms of coverage and capacity with population coverage of 97.8% as of December 31, 2007.
Turkcell's main competitors are Vodafone (VOD), plus Orascom and Haci, which are privately held.
Turkcell is currently capitalized at $17.73B, with a P/E of 13.13, a dividend of 0.47, with a high beta of 2.29, on a average daily traded volume of 1.73M shares, with a current of EPS of 1.53, of which only 7% are institutionally owned.
Turkey as an economy, has economic achievements and an inflation rate falling from 70% levels to 8% levels and interest rates falling from 100% to 20% levels in the 2001 to 2007 period with political stability with a commitment of structural reforms, EU accession process, strong IMF relations and growing international investments into the country. Turkey is a unique investment opportunity with its impressive GDP growth in recent years. Turkey's expected GDP growth is continued to be at approximately 5% levels going forward vs. 2% in average in Europe which is about 15 EU countries. Suggesting further room for growth with approximately 88% mobile line penetration as of December 31, 2007, Turkey is one of the lowest penetrated markets in Europe. Turkey has the youngest and most dynamic population in Europe with around 35% of the population below age 19 forming a great base of future potential, along with its continuous population growth compared to negative growth in other global emerging countries.
Turkcell Dividend Policy
The Board of Directors of Turkcell intends to distribute cash dividends in an amount of not less than 50% of Turkcell's distributable profits, based on the financial statements prepared in accordance with the accounting principles accepted by the Capital Markets Board of Turkey, for each fiscal year. On February 27, 2008, the Turkcell Board of Directors decided to recommend distribution of cash dividends in an amount of approximately TRY648.7 million (approximately US$546.0 million as of February 27, 2008) representing a 14% increase compared to approximately TRY567.0 million (approximately US$411.9 million) a year ago. This corresponding to 50% of Turkcell's distributable income of the current year, based on the financial statements prepared in accordance with the accounting principles accepted by the Capital Markets Board of Turkey. This dividend proposal is to be evaluated and decided upon at the Ordinary General Assembly of Shareholders to be held on April 25, 2008. This represents a net and gross cash dividend of TRY0.2948699 (approximately US$0.248165 as of February 27, 2008) per ordinary share with a nominal value of TRY1 and approximately TRY0.737174 (approximately US$0.620412 as of February 27, 2008) per ADR.
Disclosure: Author is long TKC.