Telstra Shares to Trade above $6 in 2023

Last week Telstra completed its corporate restructure, which begs the question as to whether this is the start of a strong growth period for the big telco or will it disappoint, once again.

Telstra listed on the stock exchange in 1997 and for the vast majority of that time it disappointed investors, as it spent more time falling than rising. After a brief period trading under the stock ticker code TLSDA, last week Telstra started trading back under its original ticker TLS.

What is the upside of Telstra’s restructure?

For those who may not know, Telstra restructured itself so that Telstra is now a holding company of its three business subsidiaries, which include InfraCo Fixed, InfraCo Towers and ServeCo. The restructure will allow Telstra to get more value out of its assets, which will lead to more profit. It also allows Telstra to grow as we move into an ever increasing age that is reliant on communications services.

Investors would be disappointed this year, as Telstra has fallen just over 6 per cent since 1 January, although it has fared better than the All Ordinaries Index which is down nearly 9 per cent. That said, the restructure has been a long time coming and I strongly believe Telstra will now improve on its lack lustre performance that has seen it only grow by 11 percent since 1 November 2017.

The good news for long suffering shareholders is that I believe Telstra will be bullish over the long term with the restructure taking off the hand break and allowing it to spearhead down the superhighway. The expected price target is at least $4.60 in the not too distant future and between $5 and $6 over the medium term.

What were the best and worst performing sectors last week?

The best performing sectors included Energy up 4.96 per cent followed by Utilities up 3.63 per cent and Materials up 2.63 per cent. The worst performing sectors included Consumer Staples down 0.15 per cent followed by Healthcare up 0.39 per cent and Financials up 0.93 per cent.

The best performers in the S&P/ASX top 100 stocks included Downer EDI up 9.79 per cent followed by Fortescue Metals up 7.52 per cent and Alumina up 7.41 per cent. The worst performing stocks included Domino’s Pizza down 12.48 per cent followed by Lend Lease Group down 12.07 per cent and Orora down 4.58 per cent.

What's next for the Australian stock market?

This first week of November was certainly a good example of why I keep recommending investors be cautious. While the All Ordinaries Index had risen over 3 per cent by Wednesday of last week, it wiped out over 2 per cent of that rise on Thursday. The market then rose slightly on Friday to close the week up 1.66 per cent although we may not have seen the end of the large swings in price, as the market continues to be indecisive.

Adding to the good news, the All Ordinaries Index moved up to its highest level in five weeks and is now above the 7,000 point level. That said, the close last week was weak, and until we see it break strongly above 7000 points and hold above this level, I expect we will continue to experience volatility in the market.

While the bulls have been marginally more dominant and edging the market higher, if it is to rise further they need to come out in force. While it is possible this slow upward trend may last for a few more weeks, given the lack of strength from the bulls we could expect at least one week down in the next couple of weeks. Until the trend is properly underway, I will continue to reiterate that investors need to exercise caution because as we have seen this week the market is prone to do the unexpected.

For now, good luck and good trading.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the bestselling and award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.