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Stock Pick by bluefoxicy

FTR: FTR: A good long hold

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Posted 2128 days ago on 9/28/11

FTR will go UP
$0.47 on 9/28/12
$15.88 (3,773.17% from time of market call)

I've had my eye on Frontier Communications (FTR) for a while. I can't recall if I saw it in Motley Fool's Income Investor or if I stumbled across it looking for high yield stocks. Maybe it was a related company when peeking at a communications firm on Google Finance. Who knows? What matters is this: FTR has always had a strong dividend. I bought the stock because, in my naivety, I latched onto high yield stocks as free money. I lost in several stocks this way, and learned a hard lesson; but FTR has always stayed strong. Their dividend went down, but remained high yield and has been stable since its reduction from 25 cents to 18.75 cents. The Paragon Report for FTR rates it as a moderate to strong buy. The cash flow of FTR is strong, their balance sheets look good to me. Analysts are neutral, hold, Reuters says buy and Smart Consensus says hold. So the analysts aren't interested, but it's not the worst buy ever. I don't care much for all that gobbledygook and indicator stuff. What I want to know about FTR is simple: do they have the cash to back up their dividend? Are they paying over 11% right now to attract investors or because they actually have money? It looks like the latter: they have enough money flowing through the business to make those kinds of pay-out and, wouldn't you know it, the stock price is just that low! Given the economy, I foresee their stock price holding, maybe climbing. In the short term it'll probably go down. FTR serves communication services and has to compete with Verizon (VZ) and Comcast (NASDAQ:CMCSA), among others; competition is fierce, the economy is against them, and they are holding it together. That to me says "Strong Business." But don't take my word for it; look in the Paragon Report, look in Google and Yahoo finance, read the analysts' opinions, look at their cash flow, and--just to make things perfectly clear--take a look at all the insider stock purchases. These people know their business isn't floundering in a shallow puddle. I have to agree with the Paragon Report on FTR: Moderate to Strong Buy. I might lean a little stronger than they do. DISCLOSURE: I hold long in FTR, plan to buy more. I have no holdings in Comcast or Verizon and no plans at this time.

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