NEW YORK (CNN/Money) - If you follow the Peter Lynch mantra of buying what you know, then investing in telecom and cable companies would seem to make a lot of sense. Just think about how much you dole out every month to talk on your cell and to watch TV.

But the telecom and cable businesses are both highly competitive. So as a way to cash in on the fact that consumers are spending more on new services for their cell phones and cable some analysts are looking further down the food chain -- specifically, the companies that help the telcos and cable send out those monthly statements.

Amdocs, Convergys, CSG Systems and Portal Software are the top four publicly traded companies in the business.

Amdocs and Portal develop software that companies can use to run their own billing systems.

Convergys and CSG, which also make software, are known more for taking over the billing functions (that is, telcos and cablers 'outsource' to them).

Business has been picking up. Convergys announced last week that Verizon Wireless would be using its billing software for some new data services, including ring tones.

Also last week, CSG announced billing services contract renewals with its two largest customers, Comcast and EchoStar.

However, analysts don't think all four billing companies are equally attractive.

The business of billing Amdocs is more expensive than its peers but its growth prospects are the brightest. Company  P/E*  Est. '04 EPS Gr.*  Est. '04 Rev. Gr*  LT Est. EPS Gr. Rate  Amdocs  25  21%  13%  15%  Convergys  17.1  -24%  3%  8%  CSG Systems  22.1  -15%  -6%  10%  Portal Software  N/A**  N/A**  9%  32%   * Based on calendar '04 EPS est. and prices as of 3/30/04. **Portal Software is not expected to post a profit in '04  Source:  Thomson/Baseline

Michael Mahoney, managing director with hedge fund EGM Capital, said he only owns Amdocs, which makes software used by many large telecoms, including Verizon, BellSouth and SBC.

Mahoney said that Amdocs has the most comprehensive billing software on the market, which will be critical as telecoms start to roll out more new services such as Internet phone calling, or voice over Internet protocol (VoIP). In addition, Amdocs can also tap the upstarts getting into VoIP, which will all need to send out bills each month.

"VoIP is a big area of potential growth for Amdocs over the next few years," said Mahoney, adding that he has bought more shares of Amdocs in the past two months.

Amdocs is the most expensive of the four billing companies, trading at about 25 times calendar 2004 earnings estimates. But Scott Sutherland, an analyst with Wedbush Morgan Securities, said the premium is justified since Amdocs has the best sales and earnings growth prospects this year.

Sutherland also likes Portal Software, even though it is expected to lose money this year.

The analyst also points out that the trend is toward managing billing in-house instead of outsourcing, which could help Amdocs and Portal and hurt Convergys and CSG.

"The cards are stacked against the outsourcers. Carriers will want to have more control over billing," Sutherland said.

Another concern facing Convergys is that one of its largest telecom customers, AT&T Wireless, is set to be acquired by Cingular, co-owned by BellSouth and SBC. Cingular is an Amdocs customer.

Related stories • Dawn of the dead telecoms • Communication breakdown? • Don't pull the plug on cable

"There is a high likelihood that Amdocs will take some share of the AT&T Wireless business over next few years," said Marianne Wolk, an analyst with Susquehanna Financial Group. Wolk estimates that the loss of AT&T Wireless as a customer could lower Convergys' earnings by 5 cents a share to 20 cents a share.

Still, some of that risk already is reflected in Convergys' stock price. Shares have fallen 11 percent this year (the other three billing companies are all up year-to-date) and the stock trades at just 17 times 2004 earnings estimates.

As for CSG, the stock has rallied since announcing its contract renewals with Comcast and EchoStar. Wolk said there had been some concerns that Comcast would terminate the deal.

YOUR E-MAIL ALERTS Telecommunications Services Wireless Phones Amdocs Limited Convergys Corporation or Create your own Manage alerts | What is this?

But even with the renewed Comcast contract, CSG is expected to post a decline in sales and earnings this year. Despite that, the stock trades at only a slight discount to Amdocs. Wolk said she thinks there is some takeover speculation built into the shares since other companies in the industry may be attracted to its cable and satellite TV customers.

Overall though, Wolk agrees with Mahoney and Sutherland about Amdocs being the best bet in the group.

"Amdocs is gaining a lot of market share and positioning itself to benefit from the biggest areas of spending in telecom," Wolk said.

Analysts quoted in this piece do not own shares of the companies mentioned and their firms do not have investment banking relationships with the companies.