Why Corus Entertainment Inc. Could Be a Steal at Less Than $7

Corus Entertainment Inc. (TSX:CJR.B) could be about to take off in price. Why now might be a great time to buy.

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Corus Entertainment Inc. (TSX:CJR.B) just can’t seem to find much momentum these days. An improved second quarter gave the stock some hope that it could finally get a much-needed boost. And while the stock did initially increase, over the past three months it has declined 20% and is not far from its 52-week low of $5.56.

Telecom stocks have seen a lot of bearish activity this year, especially as online streaming options continue to rise in popularity. However, despite all this negativity, there are three great reasons to buy Corus today and why it could be a great investment at under $7 per share.

It offers investors great value

The stock is a downright bargain trading at only six times earnings and half of its book value, and it’s well below the value of its peers. With the strong portfolio of assets that Corus has, it’s a low-risk move that could offer investors a lot of upside in the long term. The company has consistently been able to post profits over the last five quarters, and only once in the past five years has it recorded a loss.

Corus has strong fundamentals and isn’t exposed to the risks that might come with stocks trading near or below book value, such as a problematic business model or a reliance on a commodity price. It’s surprising that investors haven’t bought up Corus at these low levels, as the stock is overdue for a big recovery.

The company controls its destiny

If advertisers prefer to go through online streaming options to attract consumers, then Corus can adapt. After all, with the rights to some of the best content in the country, Corus can offer to stream channels or even provide a service that does so to attract viewers and advertisers. Up until now, the company hasn’t really tested those waters yet, and it’s still an opportunity that can generate a lot of growth for Corus.

The potential is certainly there, and while it would be a big investment, Corus would be capable of taking it on, as the company has generated $320 million in free cash flow in the past 12 months.

It’s still a great dividend stock

The share price has been cut in half over the past year, and that has resulted in its dividend yield doubling up to an incredible 17.8%. Investors are undoubtedly concerned as to whether or not the company can continue to pay such a high yield, but Corus has not given any signs that it is looking to cut its payouts, and it can certainly afford to continue making the payments.

Even if the company did scale back its dividend, investors could still earn a great yield, as the company could make a big cut and still be paying investors an extraordinary dividend.

Bottom line

While Corus may stand out for its astronomical dividend, the stock offers investors so much more than that. It’s a great buy at a bargain price that could earn you a great return over the long haul.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any of the stocks mentioned.

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