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Why Shares In Telecom plus PLC Took Off Today

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: Shares in Telecom Plus (LSE: TEP) rose by more than 9% in early trade this morning, following a positive interim management statement from the utility supplier.

So what: The first quarter saw a 25% increase in customers, to 547,378 from 474,404 at 30 June 2013, leading to an increase in management’s expectations for profits, as chief executive Andrew Lindsay commented:

“Profits for the first half are expected to be significantly ahead of the corresponding figures for last year, and we look forward to reporting record figures for revenue, profits, earnings and dividends for the full year.”

Elsewhere, Telecom Plus saw record numbers of new partners joining in the period from 1 April 2014 to 14 July 2014, which was boosted by the half-price joining offer which ran during April.

Now what: Management reiterated previous guidance of full-year profits increasing by close to 50% (which led to a 10% spike in the shares on the day of the announcement in May), and confirmed the company’s commitment to progressive dividend growth. Telecom Plus currently pays a decent dividend of 2.8%, with a 3.3% yield forecast.

Despite today’s lift in the share price, Telecom Plus is down by around 30% since the beginning of the year. However, shareholders who bought into the stock at its low back in 2010 have still seen the shares increase almost five-fold, marking the company out as a prospective growth-and-income stock.

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Sam Robson has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.