Telecomms expecting 24% 1Q earnings growth: Telecomms (index: IYZ) have been trading at its highest since the recession and are expecting a market-leading 24% growth in the first quarter 2014 (according to FactSet). VZ (Verizon) is responsible for a large majority of the growth this quarter. However, given that VZ is the IYZ leader (in terms of market cap), this growth will be felt throughout the industry as Telecomm stocks spike off VZ's sympathy. Therefore this weeks watchlist consists of VZ and telecomm sympathy plays.
Note: Although we are bullish Telecomms this week, we are long-term bullish VZ and others listed below that are trading a foward-P/E below 15, which is the forward-P/E of SPY. We expect an additional 10-15% growth throught 2015 for IYZ, once it clears resistance at $30/share.
SYMBOL (stock or options?) - foward-P/E
CALL (common stock)- MagicJack VocalTec is currently trading at foward-P/E of 10.1
NTLS (common stock)- NTELOS Holdings Corp. is currently trading at foward-P/E of 14.0
TMUS ($33Apr2014 call options)- T-Mobile is currently trading at foward-P/E of 31.0
TDS (common stock)- Telephone & Data Systems' forwards-P/E is N/A.
Hedge: We are considering hedging our position(s) with $110Apr2014 TLT call options.