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    The Big Canadian Telcos Stocks to Buy in 2019

    Melisa R. H. Posted On August 20, 2019
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    defensive stock

    Global markets have been experiencing a tumultuous couple of weeks, with concerns mounting over an upcoming recession. The inverted yield curve that has only worsened, and has investors on edge. Concerns over the trade war between the U.S. and China have also depressed the market. In such volatile times, investors need to consider risk and look at more stable defensive stocks, such as the phone companies.
    Telecommunication stocks are known to be resilient, even during a recession, as people are likely to keep their phone and internet connections. They are utility type holdings. In Canada, they are a virtual oligopoly that gives them further stability and protection. Furthermore, most telecom companies pay dividends with decent yield, so it could be an important place to hide your money and weather the storm.

    📱 Telecommunications
    Canada Stocks
    BCE Inc. (BCE-T)
    Previously known as Bell Canada, BCE is a good choice for those looking for dividends yield and growth. It’s a safe haven stock that grows dividends yearly. In a falling interest rate environment, it will continue to do well. It is a good income stock that will perform well since it is part of an oligopoly in Canada.

    BCE Inc. (BCE-T) — Stockchase
    BCE Inc. (BCE-T) — Stockchase

    Opinion about BCE-T: Telcos in NA are a mixed bag right now. He'd be a seller. Other things outside of telecom to do with your money.

    stockchase.com stockchase.com

    Telus Corp (T-T)
    Telus is a strong choice for investors looking for a telecommunication company with good market share and a good yield. They are currently paying a dividend of around 4.7%. They have shown good organic business growth, and have continued to add new customers. They are diversified and is ideal for those seeking yield and safety.

    Telus Corp (T-T) — Stockchase
    Telus Corp (T-T) — Stockchase

    Opinion about T-T: Yield is ~7.3%, pretty high (10-year average is ~5.4%). No doubt about dividend sustainability, grew about 7% a year over last decade. All telcos should see easier earnings comparisons as price war is in the rearview mirror. Peers are distracted with integration. Nice portfolio of non-telecom businesses with faster growth rates. $3B…

    stockchase.com stockchase.com

    Rogers Communications (B) (RCI.B-T)
    Rogers has a good likelihood of growth. They will perform well later in the cycle and is more resilient in a recession, with a low beta. They are one of the most diversified telecommunication companies, with assets in sports, publication and other media.

    Rogers Communications (B) (RCI.B-T) — Stockchase
    Rogers Communications (B) (RCI.B-T) — Stockchase

    Opinion about RCI.B-T: Has had a strong move after languishing along with other telcos. Telcos are boring and defensive, lower beta. So they'll weather the upcoming corrective storm of 1-3 months. 

    stockchase.com stockchase.com

    Shaw Communication (B) (SJR.B-T)
    Shaw is going through a long-term expansion, after buying Wind Mobile and other acquisitions. They are also investing into their streaming services. There are some concerns over their capability to grow, since 5G is expensive and they have some debt. It has a controlling interest in Corus Entertainment that is weighing down the stock. They pay a 4% monthly yield.

    Shaw Communication (B) (SJR.B-T) — Stockchase
    Shaw Communication (B) (SJR.B-T) — Stockchase

    Opinion about SJR.B-T: It comes down to the Rogers deal, which the street thinks will happen, but this is the fourth deadline extension. The deal has been priced into shares, so there isn't much upside. Better to buy Rogers or Telus than Shaw.

    stockchase.com stockchase.com

    Cogeco Cable (CCA-T)
    The company has done very well over the last couple of years, and has always been held out as a possible acquisition target by Rogers. They are diversifying by buying more U.S. assets. It has good return on capital and has grown very well this year.

    Cogeco Communications (CCA-T) — Stockchase
    Cogeco Communications (CCA-T) — Stockchase

    Opinion about CCA-T: Likes the chart here. The sector is underperforming. This and Quebecor are small caps compared to peers, which is tough for institutional investors to buy them. But the RSI shows momentum. He sees good upside. A leader in this space.

    stockchase.com stockchase.com

    Quebecor Inc (B) (QBR.B-T)
    A more regional telecommunication company, concentrated in Quebec. They are reinvesting a lot of money into their network and have experienced earnings growth of over 20% last year. They have a high free cash flow that they can redeploy. They have an edge over their competitors in Quebec, so this could be a good regional play.

    Quebecor Inc (B) (QBR.B-T) — Stockchase
    Quebecor Inc (B) (QBR.B-T) — Stockchase

    Opinion about QBR.B-T: (A Top Pick Jan 23/24, Up 3%) Benefiting from the Freedom Mobile purchase. Able to expand in Ontario and Western Canada without deploying too much capex. Very high ROE and free cashflow, allowing them to lower debt and obtain investment-grade rating on bonds. Aggressively buying back shares. Best-performing telecom stock this year.

    stockchase.com stockchase.com

    Tucows Inc. (TC-T)
    The second largest domain registrar worldwide. They were under the radar until last year when they broke out. The stock price has pulled back now, but the company is capital efficient and is expected to grow. They are also active in the reselling of mobile phone services.

    Tucows Inc. (TC-T) — Stockchase
    Tucows Inc. (TC-T) — Stockchase

    Opinion about TC-T: Sold because its ROIC returns started to get a bit wonky. In fact in last 3 years, ROIC has been negative. Satellite internet access has eaten the lunch of fibre. Hard to form a moat around its domain business. Wait for ROIC to be in excess of 20% for at least 3…

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