Orange (ORAN)

Orange (ORAN) from Contra the Heard

Orange (ORAN), the former France Telecom, has had a lovely run since the beginning of the year. Our feeling is that there is lots more upside in store for this leading telecom provider in France. Operations also cover Poland, Spain and parts of Africa. But hey, if you want to visit corporate headquarters, plan a jaunt to Paris.

Orange is enormous, with revenues of almost $56 billion. Debt is a heavy $53 billion, not unusual for enterprises in this sector. Cash flow from operating activities is almost $10 billion. That helps finance the dividend. The book value is around $12.50.

Orange has been retreating from some markets. Recent sales have included the operations in the Dominican Republic and Uganda.

When we bought into this company, European telecoms were verboten to many investors. The tide appears to have turned, and though not exactly in favor, potential shareholders appear to be finding this sector less unsavory. That could bode well for the stock price.

Our initial sell target is $27.74. That could take a while, but in the meantime, we are content to accept the fat dividend.

Benj Gallander, Contra the Heard Investment Letter, www.contratheheard.com, 416-410-4431, July 4, 2014

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