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Share of the Week from The Share Centre w/c 16th January 2012
Sheridan Admans, investment research manager at The Share Centre, picks Vodafone as his share of the week. Here’s why:
“Mobile phone usage and data have proved fairly defensive in recent years. The thirst for data services is being driven by the smart phone and mobile tablets, such as the iPad. It seems mobile phones have become embedded in our everyday lives and people prefer to reduce budgets elsewhere than surrender their personal phone.
“Vodafone has been streamlining its business by selling some of its non-core assets and using the proceeds to pay off debt and continue its share buy back programme. This strategy has allowed the group to concentrate on other areas, such as America and India, where it has a big presence. However, there is further streamlining to be done and analysts believe the next areas where sales will be made will be either Australia or New Zealand, raising a possible further £3bn.
“In July Verizon Wireless, the US business that Vodafone has a 45% stake in, announced it would be paying a special dividend, which translates to 4p a share to ordinary shareholders. The announcement in September to form strategic partnership with Asian mobile alliance Conexus should also increase Vodafone's presence in Asia.
“Vodafone continues to seek new areas of potential growth for its business. It recently launched a 'charge to bill' service, that allows customers to charge purchases from online application stores to their mobile phone accounts, and initial results have been encouraging. Investors continue to see steady growth from emerging markets and data services, which now represents 14% of revenues and is a core part of the group’s strategy.
“We recommend Vodafone as a ‘buy’ for investors wanting a business exhibiting defensive qualities, strong levels of free cash flow, a debt reduction plan and concentration on its core growth opportunities while looking for the next growth prospect. The yield also looks increasingly attractive for income seekers.”
THIS DATA IS PROVIDED BY THE SHARE CENTRE. THIS IS NOT INTENDED TO CONSTITUTE AN OFFER OR AGREEMENT TO BUY OR SELL INVESTMENTS.
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