This Turkish company prints so much money you can call it mechanical. The company I'm talking about is Turkcell (NYSE: TKC ) , a Motley Fool Global Gains and Motley Fool Income Investor recommendation.
Strengths
A financially strong company, Turkcell has $2.7 billion in cash and only $1.8 billion in debt. It sports a low debt-to-equity ratio of 31.5%, especially when compared to other large carriers, such as Verizon's (NYSE: VZ ) 146% and Frontier Communications' (NYSE: FTR ) 1,850%. Competitively, the company is also strong. In Turkey, which is expected to grow 6% this year compared to the United States' 2.7%, Turkcell has a 58% market share with subsidiaries of Vodafone (NYSE: VOD ) and Telecom Italia (NYSE: TI ) controlling the rest.
Turkcell has strong cash flows, with operating cash flow at $1.25 billion over the last 12 months. Some of its cash goes to paying shareholders a dividend, which currently yields 3.9%. Turkcell reinvests its remaining cash flow to enhance and expand its network in Turkey and in emerging markets such as Ukraine, Kazakhstan, Azerbaijan, Georgia, and Moldova.
With such large capital expenditures, the company's price-to-free-cash-flow ratio of 46 looks horrendous. However, if the company were to stop growing its network, the ratio would be much closer to its P/E ratio of 14. For a company which analysts expect to grow 11% this year, this stock is cheap.
For these reasons and others, our community of 170,000 investors rates Turkcell a five-star stock. CAPS member kipwrite had this to say in March:
Emerging market, strong brand name, and excellent service. Just returned from Istanbul and they appear to have a dominant position. I suspect strong growth on the data side.
Foolish takeaway
Turkcell is a strong competitor in the growing telecom sector of Turkey and emerging Eastern European markets. It is one of the few Turkish companies listed in the United States. If you want more exposure to the fast-growing economy of Turkey, there is also the iShares MSCI Turkey Investable Market Index ETF (NYSE: TUR ) .
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