The video below is part of The Motley Fool's "11 O'Clock Stock" series, where we recommend a new stock every weekday at 11 a.m. ET on Fool.com over 50 weekdays. To see a video of co-founder Tom Gardner explaining the series, click here. To see our original recommendation of Telefonica
Investors have been fleeing European stocks as concerns have mounted over sovereign debt levels on the continent. Fool analyst Jordan DiPietro says there are legitimate concerns about that debt, however, a lot of stocks have been battered unfairly, and foreign telecoms happen to be an area that looks particularly attractive. DiPietro thinks Telefonica, which is a Spanish company, has some great prospects and is trading at a really reasonable price. To see DiPietro's full thoughts on Telefonica, watch the video, then read on below:
Right now, there's definitely plenty of beaten-down foreign telecom companies to choose from. Telefonica competes with Vodafone
Looking at its forward P/E multiple of 8.9, Telefonica is trading well below its five-year historical average. In addition, shares are around $70, and DiPietro assesses its fair value at about $84, which means there's at least a 20% margin of safety. Add to that a solid 5.8% dividend yield, and you've got a really stable company that's significantly undervalued.