Telecom Foolishness

We took a look at FTR on the recommendation of a friend. They are a communications company serving rural areas of the country. They are involved in broadband, cable tv, and computer tech support. FTR may exist because of anti-trust telecommunications legislation that sought to make sure Ma Bell and her brood of Baby Bells didn't monopolize telecom. Here is an analysis from nasdaq.com (in partnership with The Motley Fool). It explains the rationale behind their evaluation of the stock. While they didn't put a lot of confidence in FTR, it was interesting to see the breakdown of how they evaluated it. This might be a good model for us to try and become more methodical about evaluating stocks. 

Here were their criteria: 

Profit Margin
Relative Strength
Compare Sale and EPS Growth to Same Period Last Yeara
Insider Holdings
Cash Flow From Operations
Profit Marghin Consistency
R&D As a Percentage of Sales
Cash and Cash Equivalents
Accounts Receivable to Sales
Long Term Debt/Equity Ratio
P/E to Growth 
Average Sales Outstanding
Sales Ratio (P/E Growth)
Daily Dollar Volume 
Income Tax Percentage

The article assessed the overal desirability of this stock in terms of Passing of Failing at each of these criteria. There were more than a few criteria where they failed because a lack of data. We found this a little misleading, thinking some other term might be more accurate. 

However, it is interesting to note that we found another article associated with The Motley Fool that said kinder things about FTR. This article supposed that FTR could continue its impressive dividend yield. The problem is that these two analyses send different messages. This is the portion of the program where we mention that investing will never be an exact science. Additionally, the first article is likely heavily automated, whereas the second is obviously the work of a real person. One is not necessarily superior, and there are advantages and pitfalls to both. 

Next week, we should keep hacking through our friend's portfolio. 

And here's the last bit of telecom foolishness.

Profit!