The Top 10 Telecom Stocks of 2010

It's been a pretty kind year to stock investors, with the S&P showing a 12.5% gain in 2010. Of course, kindness might still feel relative after a lost decade of negative returns that included the nauseating depths and panic of the financial crisis.

However, while the general market might have edged up at a low double digit pace last year, quite a few stocks poured in monster performances either by riding new trends or by rebounding much stronger than investors expected.

Here's a list of this year's top 10 performers in the telecom industry.

Source: Capital IQ, a division of Standard & Poor's. Only includes companies listed on U.S. exchanges that contain a market capitalization greater than $500 million.

While IDT heads up the list, long-term investors might not be as happy with their nearly 500% gains as you might expect. That's because while IDT has been on a tear recently, it's still trading well below its pre-financial crisis levels. Luckily for shareholders, management continues to turn the company around, and has announced intentions to spin off its non-core energy business.

The biggest story of the year has to be the continuing consolidation and focus on dividend paying landline-focused companies. That's not entirely reflected by our list of top performers. Thanks in large part to its merger with CenturyLink (NYSE: CTL), Qwest appeared on the list along with Alaska Communications. However, looking at who just missed the list, there's a collection of these large landline companies.

Source: Capital IQ, a division of Standard & Poor's.

In the age of exploding wireless usage, it might seem odd that these companies focusing on seemingly archaic landline technology would be among the top performers. However, despite dicey growth propositions going forward, the industry has done a good job cutting costs and a wave of consolidation has added scale to companies like Frontier and CenturyLink. Looking ahead, 2011 should be a more telling year for this group as investors are able to gauge their success integrating all the acquired companies across the past couple years.

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