Opinions
Greg Newman
Rogers Communications (B)
RCI.B-T
PAST TOP PICK
Dec 19, 2024
Stock price when the opinion was issued
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He still likes it, but recently they warned that earnings will be lower. There's a lot of value in this company. Collect the dividend as you wait. The telcos are tired of this price war, so prices to consumers will become more rational in time. He hopes the group lowers expenses, stabilize or raise EBITDA margins and use technology to improve performance.
Value story turned into a value trap. Whole sector's seen pressure. Is he freaking out over it being down? No. It's part of a balanced portfolio. Analogous to planting a garden -- not everything grows at the same time.
This wasn't his plan for the stock, but these things happen. You'll find that the stocks that are very unpopular become purged, especially on tax-loss selling. Then, when there is a catalyst, they do start to go higher and can do so quickly because they're under-owned. More importantly, it can give you some stability if markets come down; this one won't get sold, because everyone who wanted to sell already has.
RCI.B complaints by consumers has forced the stock down to very attractive levels. It trades at 14x earnings, under 2x book and has been building quarterly cash reserves while paying down debt. The robust yield is backed by a payout ratio under 75% of cashflow. There is room for the company to make improvements with their customers that shouldn't be too costly. We recommend setting a stop-loss at $35, looking to achieve $52.50 -- upside potential of 28%. Yield 4.9%
(Analysts’ price target is $62.46)No exposure to telcos at this stage. Pretty decent, high-quality name, yet stock continues to suffer. 200-day MA is falling, and stock price is below that. Stock hit 52-week low today. Technically, not a name to be involved in.
May seem cheap on PE, but not a name he likes. As well, he's more a growth manager than a value manager. Nice dividend of 5.2%, but you'll have to keep an eye on that over time.
CRTC hasn't helped. Lack of population growth was not foreseeable. Interest rates went up faster than anticipated. Believes telcos will start to follow the US model and start to sell their towers, lots of opportunity to monetize to the upside by selling assets. He'd be really surprised if this wasn't a really good buying opportunity.
Still likes the name. He did sell some shares a few dollars north of here, but certainly not in registered accounts.