2015 has been a hugely challenging year for Talk Talk (LSE: TALK). That’s because its shares have fallen by 25% since the turn of the year as a result of the hacking of its systems which compromised customer data. This has led to declining investor sentiment, with many investors being of the view that the size of Talk Talk’s customer base could come under pressure as a result of reputational damage.
Clearly, this is a major risk for the company and, realistically, it would be of little surprise if new customers are difficult to acquire over the medium term. However, this could present an opportunity to buy a slice of the business while it is trading at a discounted price. For example, Talk Talk now trades on a price to earnings growth (PEG) ratio of 0.4, which indicates that there is a sufficiently wide margin of safety on offer to merit purchase at the present time.
Certainly, there may be further challenges ahead and trading updates may point to relatively poor performance in the short run. But, with the quad play market set to offer strong long term growth, Talk Talk seems to be a good value, albeit risky, buy for the long term.
Meanwhile, technology company Laird (LSE: LRD) has enjoyed a strong year, with it rising by 10% versus a fall of 4% for the FTSE 100. Due to Laird’s strong earnings growth rate, however, its shares still offer excellent value for money with them trading on a price to earnings (P/E) ratio of just 15.6 at the present time. When the company’s growth forecast of 10% for 2016 is taken into account, this indicates that they are worth buying.
Furthermore, Laird continues to be a sound income play. For example, it currently yields 3.7% despite paying out just 54% of its profit as a dividend. This, plus its upbeat earnings growth rate, indicates that dividend growth is likely to be fast-paced in future years This is likely to make Laird a popular stock among investors who are set to be yield-hungry for a number of years if the Bank of England’s interest rate outlook proves to be correct.
Similarly, Vodafone (LSE: VOD) is a top notch income stock, with the telecoms company currently yielding 5.2%. Looking ahead, dividend growth is possibly the brightest it has been for a number of years at Vodafone, since the company’s European exposure seems likely to deliver a positive outcome. That’s because the single-currency region’s looser monetary policy, aided by quantitative easing, is likely to provide a major boost to its performance in 2016 and beyond, thereby aiding Euro-focused companies such as Vodafone.
Evidence of this potential can be seen in Vodafone’s forecast earnings growth rate of 20% for 2016, which has the scope to boost investor sentiment in the stock. And, with Vodafone having a sound balance sheet, having undertaken major investment in its network and also moving into new product lines, now could be an opportune moment to buy a slice of the business for the long term.
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Peter Stephens owns shares of Laird, TalkTalk Telecom Group plc, and Vodafone. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.