Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Spanish telecom giant Telefonica (NYSE: TEF) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Telefonica's business and see what CAPS investors are saying about the stock right now.

Telefonica facts

Headquarters (Founded) Madrid (1924)
Market Cap $117.5 billion
Industry Integrated telecom services
Trailing-12-Month Revenue $90.9 billion

CEO Cesareo Izuel (since 2000)

CFO Santiago Valbuena (since 2002)

Return on Equity (Average, Past 3 Years) 36.4%
Dividend Yield 7.8%

Vodafone Group (Nasdaq: VOD)

American Movil (NYSE: AMX)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 97% of the 652 members who have rated Telefonica believe the stock will outperform the S&P 500 going forward. These bulls include SlowAndSteady123 and alzbeta.

Earlier this year, SlowAndSteady123 tapped the stock as tempting income opportunity: "Europe's crisis won't ultimately affect Telefonica to a great degree, which will continue to grow in Latin America. ... Plus, the dividend is great."

Currently, Telefonica even sports a cheapish price-to-cash flow of 5.2. That represents a discount to other foreign telecom stocks like Vodafone (7.4), American Movil (9.0), and China Mobile (NYSE: CHL) (5.6).

CAPS member alzbeta elaborates on the Telefonica bull case:

This Spanish stock is not as closely tied to the national economy as many, but has been beaten down by the flight of capital from Spain due to their fiscal difficulties. I think Spain will weather the economic storm with difficulty, and companies like Telefonica, who have half their income coming from South America, will do better than the average Spanish company.

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