The Telstra Corporation Ltd (ASX: TLS) share price opened higher today, pushing the shares to a 12-month high. Will it keep going higher?
Telstra is our country’s oldest telecommunications business, having built the first telegraph line in 1854. In 2019, it provides more than 17 million retail mobile services, around 5 million retail fixed voice services (e.g. home phones) and 3.6 million broadband services.
Telstra also has operations in eHealth, network applications and subsea cabling. In 1997 (until 2006), the Government sold Telstra to Australian investors by listing the shares on the ASX. The second batch of Government share sales, called “T2”, was conducted in 1999 at $7.40 per share.
2019: A Good Year For Telstra?
The last 12 months have seen the Telstra share price rise by 11.5%. Up another 1% today on no news, Telstra shares are currently priced around $3.45, a price last seen in early 2018.
A recent Rask Media article by our founder Owen Raszkiewicz looked at analyst ratings for Telstra shares and found that around half of the analysts had either a buy or overweight rating on the stock. However, the average price target was just $3.32. That means, Telstra’s share price is already pushing past this level and could be due for a pullback – if analyst price targets are to be believed.
While Telstra does have potential growth ahead with the 5G network, they still face many challenges with this network and with the NBN. Reflecting this, their dividend has been cut by 50% over the last few years.
Is it A Buy?
With the share price hitting 12-month highs and the challenges and spending involved with its 5G network, I think it’s hard to say that $3.45 is an attractive price to pay for Telstra shares, especially with the dividend lower than it once was.
One company that might see better growth over the next 12 months is TPG Telecom Ltd (ASX:TPM) but that may be a bit of a gamble as well. I think the best way to get exposure to this kind of company is through an ETF that includes the largest shares on the ASX. Or, if you want ASX shares with much more growth potential, a good place to start looking is in our free small cap investing report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.