In today’s daily we have covered stock research on TPG Telecom (Expensive). To view Top 20 Dividend Stocks click here

S&P 500 was up 1.40 points or 0.07% on Monday and closed at 1924.97. The Dow and the S&P 500 ended at record highs again on Monday as a closely watched read on U.S. manufacturing was revised to show more strength than initially indicated. It was the second straight record closing high for the Dow and the third straight record close for the S&P 500.

American Realty Capital Healthcare Trust Inc. jumped 9.7 percent after Ventas Inc. agreed to buy it. Japanese stocks were the clear outperformers on Monday as the Nikkei 225 Average jumped 2.1% to its highest close for 2 months in a response to an encouraging set of Chinese economic figures. Factory reports from around the world were mixed. Manufacturing in the Eurozone grew at a slower pace amid weakness in France.


S&P 500 Daily Chart (Source – Thomson Reuters)
 
S&P ASX 200was up by 26.0 points or 0.47% on Monday and closed at 5518.5 points. Online real estate businessREA group has appointed former Microsoft Australia boss Tracey Fellows as their new CEO. CBA announced that it has become a substantial shareholder in the Retail Food Group (RFG) representing a 5.01% voting power. RFG is a franchisor and intellectual property owner of the Donut King, Michel's Patisserie, Brumby's Bakery, Esquires Coffee, Pizza Capers Gourmet Kitchen, Crust Gourmet Pizza Bars and many other businesses. CBA also announced that it has become a substantial shareholder in NRW Holdings representing 5.02% of the voting power.  Rio Tinto has completed the sale of its 50.1% interest in the Clermont Joint Venture to a entity jointly owned by Glencore and Sumitomo Corporation.



S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 


Stock of the Day – TPG Telecom (TPM)
 
TPG Telecom Limited is engaged in the provision of consumer, wholesale and corporate telecommunications services. The Company operates in two segments: Consumer and Corporate. The Company’s Consumer segment provides retail telecommunications services to residential and small business customers. The Company’s Corporate segment provides telecommunications services to corporate, government, and wholesale customers.


TPG 1H 14 Financials (Source – Company Reports)


TPG reported 1H14 EBITDA of $165.6m, up 8% on the previous corresponding period. An interim dividend of 4.5 cents per share was declared up 29% on the previous corresponding period and implying a payout ratio of 40%. TPG provided guidance of underlying FY14 EBITDA of $325-330m, an increase of 10% to previous guidance of $290 – 300m. Within the telecoms sector TPG Telecom is uniquely positioned for medium term growth given its infrastructure assets and efficient cost base.


TPG home phone subscribers (Source – Company Reports)

We see TPG’s future earnings growth coming from a diverse range of organic and acquired sources. In FY14 TPG’s earnings are supported by organic growth in consumer and corporate as well as a reduced cost base and a 5 month contribution from AAPT. In FY15 the business should benefit from continued organic growth, a full year of AAPT costs, as well as savings on international bandwidth. 


TPG consumer broadband subscribers (Source – Company Reports)

TPG continues to deliver robust levels of organic subscriber growth in its consumer broadband business. Subscriber momentum in 1H14 stayed positive. TPG’s broadband market share is now 11.4% compared with 10.6% a year ago. TPG’s core mobile business added only 10K subscribers during 1H14 compared with 49K in 2H13 We believe the stock is slightly expensive at its current price of $5.93 and would review the stock at a later date.

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