Opinions
Michael Sprung
Telus Corp
T-T
DON'T BUY
Jul 28, 2014
Stock price when the opinion was issued
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Best telco in Canada. Dividend sustainable, but will also grow faster than peers; proof is in 7% increase this past year. Price war is fizzling out. More financial strength and optionality than competitors, and less distracted by acquisitions. Plans to monetize $3B of surplus real estate. Yield is 7.55%, elevated relative to its 10-year average of 5%.
(Analysts’ price target is $23.49)It's as though you're at an ugly dog show, but there's one that's less ugly. That's Telus. Spending lots of $$ on their network. Raised dividend recently -- nice, growing, relatively secure. Stable business, stable cashflow. Attractive valuation. Not a bad income stock.
In a protected environment. The whole sector will be in trouble if the government opens the door to foreign competition.
Telcos has been struggling, but remains bullish on Telus. Scores 9 for value. They announced a partnership to monetize their wireless tower infrastructure, and will buy completely Telus Digital. Q2 earnings affirmed guidance. Stable cash flow. Not an exciting growth, but will get an over 7% dividend (safe) and diversified growth. Caveat: heavy debt. Lower rates will give telcos some relief.
Competitive, tough times in the industry now. Catalyst in 9-10 months when it spins off healthcare division, thinks this will be successful. More successful than TIXT, since brought back into the fold (which some analysts weren't happy with). Committed to growing dividend, though he'd rather see dividend growth slowed and debt paid down.
If you're a long-term investor, hold. For new $$, start looking around $20.
Up ~11% YTD. She recommended this defensive play when she anticipated softness in the stock market. (If she liked it a year ago on concerns of economic weakness, she definitely likes it now ;) About to start its copper decommissioning. Capex should come off in next few quarters. Yield is 7.6%.
His firm buys market leaders in sectors that are being positively revalued. Multiple in this sector has been contracting for a long time. Big question is where does revenue come from? Very hard to turn around a stock in a weak sector that's underperforming.
If you can't rally in a bull market, what happens in a bear market? Probably gets worse. Stay away.
He doesn’t have too much of a position in telecommunications. Going from the 3-year to the 2-year contracts has made it more expensive, and he thinks people are holding on to their phones a little longer. Also, when they do issue new phones, they now have to amortize them over a shorter period of time to recoup their costs. Revenues per person are being squeezed a little. Very competitive market. With the government wanting a 4th national competitor, that could really affect the market to some extent too. Too many uncertainties.