international

Netherlands

forward P/E is 15.3 and the yield is 4%

Our old grandma Internetabanktje used to tell us: "If you’re going to go broadband, go Dutch." Royal KPN, formerly known as Koninklijke PTT, is one of the larger European fixed and mobile carriers. One thing we’ve liked about KPN lately – it appears to go up every day. We smell something going behind the scenes.

For good reason: KPN is one of those strong, incumbent Euro telecoms that appears to be rolling up half of Western Europe. Lots of cash flow. Fat dividends. Incumbency and political connections – you know, the makings of a good old fashioned monopoly. It’s just to sort of things the private-equity guys are drooling over.

The cash flow situation is attractive. In fact, it led Barron’s to recently declare this stock one of Europe’s leading takeover candidates. It makes a lot of sense. Given the mad scramble to buy up market leading cash-flow producing telecoms, KPN will clearly become a target.

Downgraded by Bear Stearns from Outperform to Peer Perform

Possible DT target; steady performer with or without this event.