Telstra is on fire in 2021 but has been tipped to keep on rising…
The post Is the Telstra (ASX:TLS) share price still good value? appeared first on The Motley Fool Australia. –
It certainly has been a great year so far for the Telstra Corporation Ltd (ASX: TLS) share price.
The telco giant’s shares are up 20% since the start of the year.
Incredibly, this means the Telstra share price is even outperforming market darling Afterpay Ltd (ASX: APT) in 2021.
Why is the Telstra share price storming higher?
There have been a number of catalysts for the strong performance by the Telstra share price in 2021. This includes a solid half year result, its plans to unlock value through a restructure and asset monetisation, and bullish commentary by management.
In respect to the latter, the company’s CEO, Andy Penn, revealed that he is targeting mid to high single digit operating earnings growth in FY 2022.
Mr Penn commented: “I am confident the many initiatives we have taken under our T22 program, particularly in simplifying the business and the digitisation program, will further improve customer experience.”
“To get the real benefits from all the effort we’ve already made, Telstra needs to be bold. I’ve set an aspiration for mid to high single-digit growth in underlying EBITDA in FY22 and $7.5 to $8.5 billion of underlying EBITDA in FY23. I am confident we can deliver this if we remain focused,” he added.
In light of this, the market appears confident that Telstra’s dividend cuts are over and that 16 cents per share will be sustainable in the coming years. This was no doubt a huge relief for shareholders who have faced countless dividend cuts over the last decade.
Is it too late to invest?
According to a note out of Ord Minnett from earlier this month, its analysts still see a lot of value in the Telstra share price.
The note reveals that the broker has a buy rating and $4.10 price target on its shares. This implies potential upside of ~14% over the next 12 months excluding dividends. Whereas if you include the 16 cents per share fully franked annual dividend the broker is forecasting for the foreseeable future, this stretches to over 18%.
Ord Minnett believes Telstra is well-positioned to benefit from its leadership in 5G internet.
Should you invest $1,000 in Telstra right now?
Before you consider Telstra, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Telstra wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
The Telstra (ASX:TLS) share price is gaining today
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.