
TSE:QBR.B
Are the dominant cable player in Quebec and benefitted a lot from Rogers buying Shaw then having to sell Freedom Mobile at great terms to Quebecor. Also, they bought spectrum cheaply so they can expand into Ontario and western Canada and much lower capex. Generating strong cash flow. Debt will probably get upgraded by year's end. 40% EBITDA margins, the best of the group. Trades at 6.5x EBITA vs. 810x its peers. Telcos remain an oligopoly. Has the most upside in this sector.
(Analysts’ price target is $40.31)
We reiterate this disruptive source in the telecommunications space in Canada as a TOP PICK. Management announced it has met all the commitments required to complete the acquisition of Freedom Mobile, which will position it well for expanding 5G in eastern Canada. We like that cash reserves are growing, while debt is retired. It trades at 10x earnings and supports a 39% ROE. Its dividend is backed by a payout ratio under 50% of cash flow. We recommend maintaining the stop at $25, looking to achieve $37 -- upside potential of 25%. Yield 4.2%
(Analysts’ price target is $37.25)