Telus Corp (T.TO)

Long Telus Corp 4.40% 4/2043 bonds and Short Gov’t Of Canada 4.00% 6/2041 bonds. (Top Pick May 15/14, Up 1.43%, Down 4.19%) Designed to make money in an interest rate rising environment.

Owns none of the Canadian Telcos. This one is fine, but there is not much growth left in these guys. The government is trying to intervene still. You are buying it for the yield.

The government is committed to bringing in a forth competitor or otherwise lowering prices. She is underweight Telcos in her portfolio. There are a number of pressures that will challenge them. This is the one they do own, however.

Well run company that he likes better than Rogers and so on. T-T’s growth is on the mobile side. BCE-T will move sideways while T-T will have capital appreciation. These have all done well and are trading at the high end of their ranges, but if you want to own one, this is the best.

This is sitting on one of its break points at about 2.5X BV. The stock has about 20% upside potential from here. The $38-$39 level has to hold; otherwise the stock could have some downside risk.

Doesn’t like the communications space. CRTC has been inundated with proposals for unbundling. There will be confusion in the space. Likes this one the best of the bunch because they are not impacted by content. Hold if you have it.

Getting into medical technology software. He does not know if this will move the needle. Loves how they tell you what will happen with the dividend. He is a buyer and bought today for new clients. Sees dividend going much higher in the future. Likes the reasonable valuation and certainty of the cash flows going forward.

Defensive stock. The bad news is all in the telecom sector already. They have done exceptionally well in wireless. They are going to use their free cash flow in areas like content and dividends. Very little downside in the stock and some growth going forward.

Have done well. Increased their dividend at a faster rate than Bell Canada (BCE-T). Likes how they conveyed the dividend plan to the market in the last few years.

Historically it does well in the summer months. It is interesting based on seasonal strength. It is trending along its 200 day moving average. Relative strength is a little better than the market. So it is okay as a buy and has positive seasonality to come.

We have had issues in Canada on telecoms, with the government looking like they want a 4^th player, which doesn’t make a lot of sense. At this point, you don’t know exactly how the government will interfere or what they will mandate for the incumbents to be doing. Not her favourite sector, but this is the best one of the lot.

Feels the current management team have done a wonderful job. They have transformed it into the kind of story that he really likes, focusing on their use of capital and the generation of cash. They are looking at consistently trying to drive their cash flow growth at 10% a year and returning capital aggressively to shareholders. Among the majors in Canada, this would be his favourite. On a near-term basis, the entire group are facing the headline risk of what is going to happen with a 4^th operator in the country.

Doesn’t own any stocks in this space. The good news is that this area is kind of an oligopoly and the 4 of them kind of control things. Feels this is the best stock in the sector. The longer chart shows they have had a beautiful run, and it is hard to argue with success.

Versus its peers, he really likes it. They have the best penetration on wireless and some of the better profit metrics. The group is struggling a little bit and have a few headwinds in their face on an inventory basis. However, he feels that a lot of that is starting to get factored into the stock. He hasn’t owned much telecom in the past year or so. Maybe it’s getting to the point where everybody recognizes that wireless is slowing down and there could be a 4^th player out there, but in the end these are great cash generating businesses.

He avoids telecoms because of government confusion or interference. Wait to see if we get a 4^th national player. If he owned one it would be this one.