Most investors make the mistake of trying to buy the bottom. Wall Street even has a catchy saying to describe this kind of investing, “trying to catch a falling knife”. The preferred strategy used by most professionals is to find a stock moving higher, buy it, and well it even higher.
When you think about it, this is the much more logical strategy, because a stock moving higher usually means the company is executing its business plan well. One such stock that has done well in 2023, and provides a nice income stream to boot, is Orange SA (ORAN).
Orange trades as an ADR (American Depository Receipt) on the NYSE. The company is a French telecom provider that operates both mobile and internet services for over 287 million customers in Europe, Africa and the Middle East.
In the telecom industry Orange is particularly well known for its ability to lay, maintain and operate submarine cables. The company just commissioned a new cable laying ship, and currently owns over 15% of the global ship capacity for underwater cables. Underwater cables carry 99% of all intercontinental telephone and data traffic.
As important of a global telecom player as it is, many U.S. investors aren’t particularly familiar with ORAN given its European base of operations. The company is trading at 9.3x projected earnings and a paltry .67x sales.
Much of its market outperformance this year, the stock is up 17% at this point, is due to rapid growth in Africa and the Middle East, which drove revenue gains of over 12% YoY in its latest quarter. Business spending is also driving growth as Orange saw 9% revenue growth in its enterprise business with increased spending on internet technology and information services.
Orange is rewarding shareholders at this point, not only with stock appreciation, but also with a hefty dividend at over 6.5%. This dividend should be supported by continued revenue growth as ORAN is in the middle of a pivot to more profitable digital services, as well as executing an intense cost cutting campaign.
Orange has an overall B rating in our POWR Ratings outperforming over 86% of the companies in our database. Its best rating, where it’s in the top 98% of companies, is in the Stability component, which is great for a dividend stock.
As I’ve mentioned in previous articles, geographic diversification, especially in a dividend portfolio, provides an extra margin of safety. Orange SA should be on the radar of U.S. income investors as a great way to pick up a non-U.S. focused dividend yield.
What To Do Next?
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ORAN shares were trading at $11.73 per share on Tuesday afternoon, down $0.00 (0.00%). Year-to-date, ORAN has gained 22.11%, versus a 10.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Jay Soloff
Jay is a former professional market maker who cut his teeth trading on the floor of the CBOE. With more than 20 years of experience trading and investing, his focus is on making professional strategies accessible to everyone, which is exactly what does in his highly profitable POWR Income and POWR Stocks Under $10 investment advisory services.
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