The wireless communications industry is currently the top performing industry on both the three-month and year-to-date (YTD) time frames. The industry's three-month and YTD performances stand at 31.07% and 56.10%, respectively. The S&P, on the other hand, stands at a much lower 6.04% three-month return and a 14.86% YTD return.
Click to enlarge
Here is a graphical, YTD look at the wireless communications industry's performance versus the S&P:
Seeking value in a well-performing industry or sector can often uncover late bloomers, companies with a high potential for increased future returns as they catch up with the rest of their industry. That said, undervalued companies in the wireless communications industry are few and far between at the moment. But a couple wireless communications companies, with significant value potential, recently showed up on my radar:
1. Vodafone Group plc (NASDAQ:VOD) recently broke above strong resistance around the $27.25 price level and is now trading somewhat near this, and what appears to be, new support level. Fundamentally, the company appears slightly undervalued with a 1.13 price to book (P/B) ratio, a 1.88 price to sales (P/S) ratio, and an 8.45% return on equity (ROE).
Analyst opinion stands at zero strong sell, zero sell, four hold, one buy, and zero strong buy recommendations with an average target of $32.07. This price target is 12.92% above the stock's current trading price of $28.40.
With fundamentals showing value and apparent strong support at the $27.25 level, Vodafone Group plc may be a bargain for those looking for one in the well-performing wireless communications industry.
2. NTT DoCoMo, Inc. (NYSE:DCM) is currently trading just 3.81% above its 52-week low of $15.49. The stock has not traded below this apparent support level since Q2, 2010.
Fundamentally, NTT DoCoMo, Inc. appears undervalued with a 1.03 price to book (P/B) ratio, a 1.23 price to sales (P/S) ratio, and a 9.18% return on equity (ROE).
Analyst opinion stands at zero strong sell, zero sell, one hold, zero buy, and one strong buy recommendation with a price target of $17.82. This target is 10.82% above the stock's current trading price of $16.08.
Though the stock is currently in a short-term downtrend, if it begins showing a consolidation pattern around the $15.50 to $16.00 price level, this should certainly pique the interests of value investors and may prove to be a wise time to purchase this late bloomer.