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ISA investors! Are these dirt-cheap growth stocks too good to miss?

Intense competition is hammering revenues across the telecoms sector. TalkTalk Telecom Group (LSE: TALK) was the latest to ring the alarm in late January. Back then it declared that total headline revenues had fallen £3m to £383m in the last quarter of 2019.

The FTSE 250 firm has risen from the canvas more recently, sure. But the bloody price war with BT, Sky, Virgin and the like is threatening to keep revenues under pressure. City predictions of a 75% earnings jump in the fiscal year to March 2020 look a little far fetched. Predictions that profits will rise by healthy double-digit percentages in the next two years look a tad toppy as well.

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And recent regulatory changes have cast even more doubt on TalkTalk’s profit-making powers. Under new Ofcom plans, telecoms, broadband, phone and TV providers will have to write to customers whose contracts are about to expire, and to advise them of any possible bill rises.  The move is designed to reduce these suppliers’ ability to charge bloated amounts to their customers.

A forward PEG ratio of 0.3 makes TalkTalk massively cheap. But it’s still far too risky for sensible investors, in my opinion.

Pile into The Pru?

TalkTalk isn’t alone in receiving bad news in recent days though.

Prudential’s (LSE: PRU) growth strategy is in large part built upon soaring populations and disposable income levels in Asia. New business profit from the continent jumped 10% in the first half of 2019, illustrating the splendid opportunities in the region.

However, the FTSE 100 firm may struggle to keep up the pace following the recent coronavirus outbreak, a development that threatens to have a big impact on economic conditions and on companies with large exposure to the region. Ratings agency S&P now predicts that economic growth in China will fall to 5% in 2020 because of the crisis, a scenario that would cause huge damage to the surrounding areas as well.

A brilliant buy

Barring an explosion in the infection rate (which we all hope doesn’t happen), I remain quite bullish on the company’s overall growth outlook. Earnings might well suffer in the near term, but for the years ahead, those favourable demographic trends remain intact.

And by expanding its product ranges, not to mention the scale of its operations in the area, this blue-chip is in great shape to reap the rewards. Rumours that Prudential is thinking of assuming full control of its 50-50 venture in China with CITIC (according to Reuters) certainly get me excited. As do claims that it’s considering selling some US assets to bolster its Asia-focused growth programme.

It’s possible that City forecasts of a 6% earnings rise in 2020 could be downgraded following the coronavirus breakout. But any amendments aren’t likely to be sizeable enough to move Prudential’s low forward P/E ratio of 10.5 times too much. On the back of its bright long-term profits picture, I reckon the business is too good to miss at current prices.

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Royston Wild owns shares in Prudential. The Motley Fool UK has recommended Prudential. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.