Stockchase Insights
Telus International Inc.
TIXT-T
DON'T BUY
Oct 18, 2023
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research
We removed TIXT from the growth model portfolio on October 10th as the drop in demand from some of its larger clients is concerning. Execution has not been great, and its debt levels are growing fast. ATS is roughly double the size of TIXT ($3.7B vs. $1.9B, respectively), and its forward growth rates are anticipated to be better than TIXT. Fundamentally, ATS is a better name than TIXT, but this is reflected in its higher valuation (18.6X forward earnings vs. TIXT at 7X forward earnings). For a higher quality company and a long-term investment horizon, we would be comfortable with a switch to ATS today. Unlock Premium - Try 5i Free
Lots of telecom companies are capital intensive, takes a long time to get its money out, never mind the shareholders getting their money out. Very competitive business. Not for a growth portfolio. No dividend.
Stock has been range bound lately - interest rates putting pressure on stock price. Expecting a double bottom going forward. Potential for strength going forward, but will need interest rates to fall.
Rising interest rates have been hard on the company. Would recommend holding and/or buying. Current share price is presenting value for investors. Does not think A.I. will undermine business. Good for long term investors. Oligopoly in Canada with mobile business.
Suspects business will be great. Energy prices, and population growth in Western Canada will ensure strength of this business. Would recommend buying this business compared to BCE. Strong management team with legacy assets.
We removed TIXT from the growth model portfolio on October 10th as the drop in demand from some of its larger clients is concerning. Execution has not been great, and its debt levels are growing fast. ATS is roughly double the size of TIXT ($3.7B vs. $1.9B, respectively), and its forward growth rates are anticipated to be better than TIXT. Fundamentally, ATS is a better name than TIXT, but this is reflected in its higher valuation (18.6X forward earnings vs. TIXT at 7X forward earnings). For a higher quality company and a long-term investment horizon, we would be comfortable with a switch to ATS today.
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