Opinions
Kash Pashootan
Transcontinental Inc. (A)
TCL.A-T
COMMENT
Jan 10, 2018
$24.600
Stock price when the opinion was issued
publishing
printing
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BUY
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The most recent quarter was a disappointment but the business fundamentals are strong. Debt has been cut in half and cash flow is solid. Relatively cheap to organic growth and dividends. Decent income stock. Unlock Premium - Try 5i Free
publishing
printing
SELL
On the surface, trades cheaply. Compelling dividend. Problem is sun-setting business in printing, and that cash cow is shrinking faster than growth of other divisions. Earnings peaked in 2018. Era of steady dividend grower is over. Dividend at risk if can't restore profitability. Value trap. Better places to invest.
publishing
printing
SELL
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. We think TCL.A continues to have potential as it transitions its print business into digital media operations and through acquisitions. However, given the lack of growth we have seen over the years and the slow growth expected, we think there are other names today that can pay a similar yield, while showing better growth. This is in part due to the market sell-off, which has resulted in many quality names having higher dividend yields. We view the recent rally in TCL.A shares as an opportunity to sell and raise cash for future opportunities.
publishing
printing
Given the value this is trading at, he doesn't view it as risky. You are not overpaying, and you are pricing in some of that transition risk which is there. It’s trading at around 9X PE with a yield of about 3.25%. A very good valuation and you are getting paid a healthy dividend. Historically, this has been a printing focused business, which is dying, but the company has done an exceptional job of transitioning to the food labelling and labelling as a whole. He is still buying for new clients.