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Telcos Boring? They Have Strong Cash Flow, Analyst Says

Put money to work in equities and pick companies with strong levels of cash flow, advised James Holt, vice president of Blackrock Investment Management.

According to Holt, several sectors fit the bill, among them the telecom industry.

“Telcos are not what people really expect as they are usually associated with boring, low growth companies,” he said on CNBC’s Protect Your Wealth.



“But they have a bit of growth behind them and they’ve got high cash flow. For us, they are an ideal sector to have in a portfolio.”

Holt said he likes telcos in the U.S. as well as those in Asia, including China. He also believes telecom companies pay big dividends and the sector is one of the best ways to play emerging market growth.

The healthcare sector also appeals to him. “They’ve become very cheap in last decade and they sell for P/E ratios in the high single-digit or early double -digits. (They) still pay big dividend and have big cash flow from large range of drugs.”

Holt said that giant health care firms were very expensive five to 10 years ago, but not anymore. That was partly due to the perception that they lacked growth potential, he explained.

“They have growth strategies in place, they are partnering with nimble emerging market pharmaceuticals to put new drugs out there. They also have a lot of cash, which is very valuable in this environment,” he said.

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Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."