Cogeco Communications (CCA.TO)

Historically a cable company. Other communication stocks haven't been doing well, either. Some of them may have a turnaround as they benefit from AI, which has the possibility of being a lifeline as more data needs to run on the pipeline.

As a turnaround story, he prefers BCE. For a cable company, he prefers RCI.B.

Not a growth business. Now cashflow positive, and covering its dividend. New technology is coming, and it might be much cheaper and much faster. A melting ice cube.

Competitive position relative to the telecom industry in Canada isn't that unique. Not a lot of growth, and competitive pressure doesn't help. 

The one he likes in the space is RCI.B.

Analysts see 25% upside, with a price target of ~$74. Still generates stable, recurring revenue from its essential services. Biggest challenge is competition. Still quality and defense. Headline loss looks alarming, though FCF increased 18%. Stay away till proof the US turnaround is working. Yield is above 6%.

She prefers QBR.B for its stronger long-term growth opportunities and more diversified business.

They have business in Ontario and Quebec, and a large cable business in some US states, but that is facing strong competition from fixed-wireless, fibre providers and satellite companies like Starlink. He's bearish all Canadian telcos, which are impacted by weak immigration and wireless competition is aggressive as the CRTC clamps down on fees and contracts. For Rogers, the business is mature and demands a lot of capex and carries $40B of debt.

Their US cable business is struggling from more competition. CCA wants to sell this business. Also, what will happen to the family's ownership position in the medium and long term? What is their business and growth if they sell their US business?

Canadian telcos are a tough space due to lower population growth, less immigration and rising inflation. All telcos are stuck. CCA is cheap and pays a dividend, so it won't hurt a portfolio much. He prefers Rogers or Quebecor, though. 

Issues centre on cable and fibre divisions -- major footprint in the US, a very competitive space. Potential competition from providers like Starlink down the road.

Telco space under pressure sentiment-wise. This name doesn't have the same spending issues that BCE and Telus do. Challenge for the space is it just doesn't have a lot of pricing power.

In general, telcos are not something he wants to be involved in. He does, however, own this one in client TFSAs. Yield is good, with dividends growing at a hefty clip. Other telcos' dividend growth has only been in 1-2% range, if at all.

Likes the chart here. The sector is underperforming. This and Quebecor are small caps compared to peers, which is tough for institutional investors to buy them. But the RSI shows momentum. He sees good upside. A leader in this space.

Dividends are not in doubt, but there has to be some way to pay down debt while growing the business. Right now, all you're getting is the dividend but very little growth.

Allowed to hop on Wi-Fi networks of the other telcos, so it's becoming a more asset-light business. Passes through higher margins, and can continue to grow dividend more than 10% a year.