There certainly are a great number of quality shares for investors to choose from on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
But one share that really stands out to me at this point in time is fast-growing telco company Vocus Group Ltd (ASX: VOC). Here are three reasons why I think it is a buy:
Reason 1: Its shares are cheap.
With its shares down by 50% in the last six months, I believe Vocus is one of the cheapest quality companies on the ASX. At just 14x trailing earnings its shares are trading on a lower earnings multiple than slow-growing telco giant Telstra Corporation Ltd (ASX: TLS). Telstra shares are trading at 15x trailing earnings, yet its growth prospects are vastly inferior to Vocus.
Reason 2: It has explosive growth prospects.
Thanks to the NBN rollout I believe Vocus is in a great position to deliver above-average earnings growth for the next few years. Especially if it continues to win market share. In the first quarter of FY 2017 Vocus increased its market share of total NBN subscribers to 7.1% from 6.4%. Because of this management is confident of delivering low-to-mid-teen underlying earnings per share growth in FY 2017.
Reason 3: Its growing dividend.
At the current share price Vocus provides a trailing fully franked 3.6% dividend. Whilst this isn't the biggest yield on the market by any means, that certainly could change in time. Management plans to increase its dividend in line with the growth of the business. With the business poised for explosive growth, this could be one dividend that every income investor should have in their portfolio.
Overall I believe Vocus would be a great investment today. It may have had a turbulent 2016, but I expect 2017 to be a very different story.
