"Investors have shied away from the big telcos in recent years because of concerns that their traditional businesses were shrinking," notes George Putnam III, an expert in uncovering turnarounds.

But now, he explains, "After years of concern about the cable companies invading their turf, the big telecoms are now well positioned to fight back."

In his The Turnaround Letter, the advisor looks at seven leaders in the global telecom space, all of which he says represent global leaders, with dominant positions in their local markets and the "potential to grow steadily by expanding the services they offer."

AT&T (NYSE: T) Putnam notes, gained control of Cingular Wireless due to its merger with Bellsouth. The renamed AT&T Wireless, he says, will account for about 35% of AT&T's revenues.

The advisor observes, "In addition to a strong wireless presence, AT&T is rolling out fiber-based landline services. With revenues expected to be north of $120 billion in 2007 and substantial operating cash flow, AT&T is a force to be reckoned with." Further, he notes, the dividend was just raised for the 22nd consecutive year, and the company is expected to repurchase roughly $7 billion worth of stock in 2007.

George Putnam III specializes in distressed securities, bankruptcies and turnarounds, making his latest featured stock in his The Turnaround Letter -- Microsoft Corp (NASDAQ: MSFT) -- somewhat of a departure from the more-troubled firms often under his coverage.

"Although Microsoft is not as beaten-up as many of the stocks we focus on," he explains, "its turnaround prospects are no less enticing."

Putnam points out that unlike many of its technology peers, Microsoft's sales have grown steadily since the tech bubble, with fiscal 2006 revenues nearly twice that of fiscal 2000.

And while net income declined for two years after peaking in fiscal 2000, he notes that it is again at record levels, with 2006 earnings per share more than 40% higher than those in 2000.

What's left to turnaround? Most importantly, the share price. Despite its growth in revenues and earnings, the stock still trades at less than one half its late 1999 price. But Putnam expects that to change.