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What Will These Communications Stocks Tell Your Portfolio? – Telecom Argentina S.A. (ADR) (TEO), Oi SA (ADR) (OIBR), Cogent Communications Group, Inc. (CCOI)

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Communications are great. We’re communicating right now, and hopefully you’ll either get a good idea for your next acquisition or advice to stay well away from something toxic. So let’s take a look at some communications companies and the stocks that track their popularity.

Cogent Communications Group, Inc. (NASDAQ:CCOI) is one of the cornerstones of the Internet. Providing Net access and data transporting as well as data center colocation, I like Cogent Communications Group, Inc. (NASDAQ:CCOI)’s stability as a service provider. Nobody wants the Internet to stop. I also like how Cogent Communications Group, Inc. (NASDAQ:CCOI) acquired a ton of different network providers early in its life, digging its moat pretty solidly.

Cogent Communications Group, Inc. (NASDAQ:CCOI)Of course, even serious stability has a price. In this case, the price is a P/E ratio that made me do a double take. 807 times earnings? Really? I believe 7 times book value and 3.6 times sales, but the profit margins Cogent Communications Group, Inc. (NASDAQ:CCOI) is pulling are miniscule. For a company with a market cap of just over $1 billion, pulling .5% profit margins seems to be playing things a bit liberally for my tastes. While the Internet is solid, it’s still technology, and technology’s only constant is change. I don’t see Cogent Communications Group, Inc. (NASDAQ:CCOI) riding out changes all that efficiently, so I would encourage you to tread lightly here.

Oi SA (ADR) (NYSE:OIBR) is the second largest telephone company in Latin America by the number of lines it holds and the revenues it generates, the largest being America Movil. This level of size and market penetration gives Oi SA (ADR) (NYSE:OIBR) a pretty solid moat in and of itself. The pot gets sweeter with seriously low valuations. Why are people only paying 5 times earnings and .6 times book value for a deeply entrenched utility that pays a 7% dividend?

Only two things come to mind, and they’re not exactly world-enders. Firstly, Oi SA (ADR) (NYSE:OIBR) is only making 4.3% profit margins. While it is a lot better at turning a profit than Cogent Communications Group, Inc. (NASDAQ:CCOI), it’s still not super to have a company that can only turn around 1/20th of what it takes in. Secondly, and this is just lame, Oi SA (ADR) (NYSE:OIBR) may actually just be a company most people have never heard of. It’s got a funny name, it’s headquartered in South America and a lot of people in the US may have never thought of Rio as the headquarters of anything besides Mardi Gras. But from what I’ve seen so far, I suggest checking into Oi SA (ADR) (NYSE:OIBR) as a buy, particularly if it can produce higher profits.

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