Profiting with the Spanish Conquistadors

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This week’s Global Bull Market Alert pick, Spanish telecom group Telef³nica (NYSE: TEF), is just such a corporate conquistador. Established in 1924, Telef³nica is Spain’s dominant domestic telecom with more than 16 million fixed lines and 20.6 million-plus mobile customers. But the company’s global footprint extends across three continents and 19 countries, with a total population of 670 million.

Telef³nica first established its presence in Latin America 15 years ago. Having invested more than Euro 70 billion ($80 billion) in infrastructure and acquisitions since the early 1990s, Telef³nica today is the leading telecom in Brazil, Argentina, Chile and Peru. It also has substantial operations in Colombia, Ecuador, El Salvador, Guatemala, Mexico, Morocco, Nicaragua, Panama, Puerto Rico, Uruguay and Venezuela.

Elsewhere in Europe outside of its home market of Spain, Telef³nica operates in the United Kingdom, Ireland, Germany and the Czech Republic, boasting more than 33.5 million cell phone customers. Telef³nica also recently won a bid to provide 3G services in Slovakia for a period of 20 years.

Already the fifth-biggest telecom company in the world with close to 200 million customers, Telef³nica is expanding its profits at a breathtaking rate. Net profits rose by 40.3% to reach 2.57 billion Euros in the first six months of this year alone. While most incumbent telecoms are laying off workers, Telef³nica’s staff grew by 23.5% compared to the same period last year.

After underperforming the red hot Spanish market over the last six months, Telef³nica’s stock has turned very strong technically in recent weeks.

So buy Telef³nica at market today and place your stop at $51.25. For even bigger potential gains, buy the March $55 calls. (TEFCK.X). Look for the stock to propel ahead of its next earnings announcement on Nov. 14.

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To make room for Telef³nica, sell your remaining shares in AstraZeneca (AZN) and lock in your double-digit percentage gains.

Six out of seven of your remaining positions are profitable. Last week’s pick — Copa Holdings (CPA) — already is up more than 5%. Millicom (MICC) is up well over 10%, with the options up 34%. America Movil (AMX) is up almost 8%, and the options have already jumped 54% in two short weeks. Sell half your AMX options here to lock in your profits.

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The best investment opportunities are often those that are the least observed. This week's Global Bull Market Alert pick is just such a hidden gem.


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