Thursday, September 27, 2007

cheap stocks continued

Continuing with the preview of the current stocks that appear on my 'cheap stocks as per my watchlist'...

Remember to do your own research before purchasing any investment.

Thomson Corp. (TOC) - Under $43
- This, to me is always a hard company to analyze as their business is currently in transition and the avenues in which they make money and run their business are complex.
- I do feel that the work they do is important and will become more so in the future.
- This is also a hard company to call 'cheap' as they have always traded at a high multiple.
- Since their acquisition of Reuters back in May of this year the stock has been very weak.
- P/E multiple contraction, I would think is a risk with this name.
- Current P/E of 16.6 is very low for this company, who's P/E is usually above 20.
- TOC has been a consistent, although slow grower of dividends and currently yields 2.7%


TELUS Corp. (T)* - Under $58
- TELUS has had an interesting year after being speculated to be an acquirer of BCE as well as acquired by private equity, personally I am glad neither occurred.
- The speculation eventually subsided which hurt the shares.
- This company reported weak earnings and some one time costs last report date and the stock came down to about 23% below it's 52 week high.
- Every time I see another 14 year old with a cell phone I remember how much growth must be left in the wireless business.
- Also all that old Bell Canada Enterprises (BCE) money needs to go somewhere, TELUS and Manitoba Telecom seem to be the obvious choices for yield as well as sector exposure.
- This company really markets their products well, and are diversifying by capturing a lot of corporate business, as well as being the strongest player in the fastest growing regions of Canada.
- Their short dividend growth history has been superb and the company currently yields 2.7%
- P/E = 19

*Buy the non-voting shares as they are more liquid and if you employ a Dividend Reinvestment Plan or Share Purchase Plan they buy T.A instead of T. I own shares in TELUS.

2 comments:

Nurse B, 911 said...

I really liked it when I saw TOC up there (nice acquisition announced today!!!). I have a question about Telus though...do you ever have a problem getting a proper valuation for both it & Rogers based on their FCF moving forward & the fact that BCE shareholders will have to park their funds somewhere? I just have a tough time making assumptions or what I feel is an adequate growth rate in a DCF analysis.

MG said...

brad,

It's a gamble like any other company. You have to know that there is a certain amount of safety built in to the estimate as their cash flow is pretty reliable. You just have to trust the mgmt. to grow the company. Personally I like the tailwind of Western Canada growth as well as general wireless and data growth...