The Motley Fool

Raptors Lose Kawhi: Should You Sell BCE (TSX:BCE) or Rogers (TSX:RCI.B) Stock?

Toronto Raptors fans received disappointing news on the weekend when Kawhi Leonard announced he will not return to the NBA champions next season.

Several teams pursued the NBA Finals MVP in the hopes he would decide to leave Toronto to help them win another league title. Pundits expected the NBA star would stay in Toronto to take a shot at a repeat victory, but Kawhi Leonard has decided to return home.

The L.A. native will join the Los Angeles Clippers for the 2019-2020 season. He is expected to sign a four-year contract worth US$142 million. The Raptors could have offered him as much as US$190 million for five years.

The historic run to the NBA Finals and championship win put Toronto on the global sports stage. The team’s success brought in millions of dollars in added revenue to the city’s businesses and proved to be a nice boost for two of the team’s owners, BCE (TSX:BCE)(NYSE:BCE) and Rogers Communications (TSX:RCI.B)(NYSE:RCI).

BCE and Rogers are partners in Maple Leaf Sports and Entertainment, which owns the Raptors, Maple Leafs, Argos, and FC professional sports teams.

Should you own Rogers and BCE stock?

Looking ahead to next year, investors might be wondering if they should dump the stocks, now that it is less likely the Raptors will be able to take a run at a repeat of their performance.

At this point, it would probably make sense to hold on to the shares, at least from the perspective of the sports teams.

Why?

The media divisions at BCE and Rogers account for very small percentages of overall revenues, so the impact on the bottom line should be minimal. In fact, losing Kawhi might not hurt the stocks at all.

The Raptors’s success in 2019 has attracted an army of new fans, and these people will continue to support the team next year. Rogers and BCE should see high visitor traffic and viewership carry through on their sports platforms, and advertisers should be willing to pay more to reach the expanded audience.

In addition, the other sports teams can pick up the slack. For example, the Maple Leafs lost in the first round of the NHL playoffs in 2019, but the team is steadily improving, and many people believe the Leafs could reach the Stanley Cup Finals next year or in 2021.

The bottom line

BCE and Rogers are strong companies that enjoy wide moats in the Canadian communications industry and should remain attractive picks for a buy-and-hold portfolio.

BCE is popular for its generous dividend, and Rogers has proven to be a powerful growth story in the past five years. The mobile and cable provider’s stock is up from $42 to $71 over that time frame. BCE’s stock is up from $49 to the current price near $60 per share.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Andrew Walker owns shares of BCE.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.