Rogers Communications (B) (RCI.B.TO)

The telecom sector has taken a beating he says. It recently tested trend line support successfully. He would continue to hold it, but would not add new money.

He would consider telcos to be interest rate sensitive. He was hoping Rogers would go back to $53.60 to become a buyer. Right now it is over-valued by about 15%. Recent earnings helped pop the stock up, but expects he will get a chance to buy it lower. Yield 3.2%.

He likes the dividend yield of 3.3%. Trading at 8.5 enterprise value over EBITDA down from 11 last July. Boosting their wireless subscribers. They are doing well. With interest rates moving higher some of the Telcos naturally tend to come off. In Canada the three main players have 90% of the market so they don’t have incentive to fight each other and lower prices. Overtime they will do fine.

The decline is probably overdone. 2018 is probably not going to be as robust as 2017. They have higher cap-X and they did not raise their dividend. He models 8% earnings growth. This is a name you can own, possibly through a put. He thinks it will do some heavy lifting over the next 12 months.

(A Top Pick January 5/17, Up 15%) Challenged the last few quarters from competition. Dividend increase this year is unlikely. Instead they will upgrade their system and save money for next year's spectrum auction.

All telcos have corrected recently. May be opportunities to buy in the next little while because of upcoming wireless spectrum hearings. Rogers is merely all right as a stock. He doesn't see much capital appreciation.

Doesn't own it (owns BCE and Telus instead). Rogers is a good, solid company, but has sold off because of interest rate increase jitters and seen to be in a low-growth industry. They've invested a lot, but have made money from the Toronto Blue Jays.

He doesn’t buy stocks based on interest rates or feelings about the market. He buys companies based on fundamentals. Everybody is addicted to cell phones nowadays. The company is doing tremendously well. Showing good growth Valuation is cheap. You have to own this one. You have to own one of the telcos.

Q4 financial results came in a little above, but thinks the market was concerned that they hadn't hiked their dividend. Their wireless additions were not as good as expected, due to the competition. The whole sector has pulled back as a result of higher bond yields. He would buy this at $60.

Chart shows 2017 ending with 2 hills, which worries him. It would indicate 9 months overhead supply, and it is now below that price. The intermediate low is very important, and he would think we have broken below it. If so, this will go even lower.

With markets up 6% this year, you want to start looking for names that haven't participated. Telcos haven't participated in the last few months. This is the largest wireless carrier in Canada with 10 million subscribers. In 2014, they pivoted their strategy to focus on customers that are most profitable, which has improved their Revenue per User and sales. They could also sell their stake in Cogeco, which is a catalyst. He likes the weakness in the stock. Dividend yield of 3.2%. (Analysts' price target is $71.)

He is a little concerned that higher interest rates are coming. Also, people are getting tired of watching sports, and this company has a number of great sports franchises. If we see a slowdown in housing, connections to cable may also slow down. In spite of all that, this company is extremely solid. Great dividend yield and great cash flow.

The whole idea of interest rates being up, and utilities, telcos and REITs down is sort of a tried and tested market strategy, but it is more of a trade than a permanent phenomenon. Looking at the fundamentals of these types of businesses, you don't want to be out of the sector. The dividend flow is pretty good. In the last 2 years we have had huge growth in cell phone subscriptions for all 3 Canadian telcos. Technological innovation keeps going through their pipes, and you want to own those pipes in a portion of your portfolio. Dividend yield of 3%.

This looks great and looks just like the TSX. It looks like a lot of the stocks he has talked about. It’s come off a little from its all-time high, but it is holding. The volume is steady and he would continue to hold it.

The new CEO is going to do good things. They are saying they have to really ramp up their cap-X program. He would prefer T-T as they are way ahead of the pack. It’s a great business and a very profitable sector. You could hang on but be conscious that you may not see such aggressive dividend hikes going forward.