At the dawn of the American Revolution, Thomas Paine wrote, "These are the times that try men's souls." I think that's an equally appropriate description of the current state of today's global equity markets. The mini-meltdown we've been experiencing was sparked by a tangled web of fears, including problems in the U.S. subprime lending market and the possible adverse effect of this issue on U.S. economic growth. There have also been worries about the effects of Chinese governmental intervention in that nation's lending and real estate markets, concerns about the unwinding of the "carry trade" in Japanese yen, and a generally more pronounced aversion to risk.

What a litany of woes, right? It sounds as though I'm suggesting that investors hit the sell button as rapidly as possible. But that's not the case. While I certainly don't discount any of these concerns, I believe that the market has overreacted and that the recent sell-off gives aggressive investors the opportunity to scoop up shares in unfairly beaten-down companies. One of these is Telefonica (NYSE:TEF), the Spanish telecom giant that's also the world's third-largest cellular operator, behind China Mobile (NYSE:CHL) and Vodafone (NYSE:VOD).

In simple terms, I like Telefonica because I think of the company as a "growing bond." The company's European businesses supply the bond component through their generation of free cash flow used to fund dividend payouts and share-repurchase programs, while Telefonica's Latin American operations drive earnings growth.

Let's call up the company's prospects and take a look.

Telefonica is one of the world's largest integrated telecom carriers. It offers fixed-line, wireless, data, and Internet services to more than 200 million customers in 19 countries throughout Europe, Latin America, and Africa. For the fiscal year ended Dec. 31, Telefonica's subscribers -- 42 million fixed-line customers, 12 million Internet and data users, 145 million cellular subscribers, and 1 million pay-TV customers -- helped the company generate revenues of $69.7 billion, operating income before depreciation and amortization of roughly $25.2 billion, and net income of $8.2 billion. (For currency-translation purposes, 1 euro is currently equal to $1.317 in U.S. money.)

Now, without getting into too much detail, suffice it to say that I believe Telefonica will make good on its commitment to double its earnings per share and dividends per share by the end of fiscal 2009, through a combination of organic growth and selective acquisitions. The reasons for my belief are simple: Telefonica is either No. 1 or No. 2 in virtually all of the markets it serves, and that scale should enable it to push its bundled services more easily. The company has also shown its ability to successfully integrate acquisitions -- as seen in its ability to raise the operating margins at O2, the recently purchased U.K. cellular operator -- and it generates ample amounts of free cash flow ($14.6 billion in 2006) to pursue the above-mentioned acquisitions while still increasing its dividends and funding its share-repurchase programs. (The company's current $3 billion-plus buyback should be completed this year).

I'd also be remiss if I didn't point out that the company's operations in the fast-growing Latin America markets show ample room for expansion. These businesses represented only 35% of Telefonica's revenue, compared with 38% in Spain and 26% in the rest of Europe.

Sounds pretty interesting, doesn't it? Well, take a gander at the company's current valuation. At a recent price of $61.50 per ADR, Telefonica trades at roughly 13 times fiscal 2007 estimates, a 13% discount to its long-term growth rate, while peers such as Deutsche Telecom (NYSE:DT) and British Telecom (NYSE:BT) trade at premiums to their much slower growth rates. Let's also not forget to consider that shares of Telefonica currently yield more than 3%, with management aiming to double the amount paid out over the next several years.

In all, I believe Telefonica is one of the best-positioned European telecoms and that investors could do worse than dialing up shares of this "growing bond."

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Fool contributor Will Frankenhoff is enjoying his time writing for the Fool more than reading The Financial Times, rooting for the Jints, or taking a nap. He welcomes your feedback at elves1us@yahoo.com. He does not own shares in any of the companies mentioned above. The Fool has a disclosure policy.