In today’s volatile market, it can be difficult to find blue-chip stocks that are both a bargain and a sure thing. While almost every stock is a discount at the moment, there are only a few that I would recommend to buy up in bulk. One of those right now would have to be Telus Corp. (TSX:T)(NYSE:TU).
This telecommunications company has a steady track record behind it, and analysts believe this will continue into the future. Even though this company’s shares recently took a dip, Telus is already on the rebound, which makes now the perfect time to buy. But let’s get into why you should choose Telus over its competitors.
Telus on top
Telus operates in two areas: wireless, and wireline. For years Telus stood behind its competitor Shaw Communications, but today that’s all changed.
Telus is now about 60% complete its fibre-to-the-home network, and aims to reach 80% of its customers by the end of 2020. This can’t be downplayed. While Shaw may have been in the lead, Telus wasn’t exactly trailing at the rear.
With this upgrade, the gains for Telus are threefold. First, the company will be able to offer faster speeds than its peers to its new customers. Fiber-to-the-home is also cheaper when it comes to maintenance, so those reduced costs end up in the company’s pockets.
Finally, Telus will also be able to charge more from its customers with this upgraded service. Basically, Telus can expect to be rolling in cash for quite a few years to come.
But it’s not just the fibre-to-the-home segment that has investors looking at Telus. The company’s wireless segment has also continued to be a force to be reckoned with, with 30% of the share of Canadian wireless customers.
In fact, Telus even holds the title of “Fastest Canadian Mobile Network.” This network held the company up while it expanded in the wireline business, and should continue to do so in the wireless business as well given the lack of competition in Canada.
As mentioned, Telus share prices dropped with the recent market crash. After a 33% drop, the stock is starting to climb back out of the gutter. As of writing, shares have come up about 20%. This is still a discount of 18% from its fair value price, with a potential upside of 36% to where analysts think it will be in a year’s time.
Telus has a strong history of stable growth, and analysts believe this should continue for long-term holders. As the company continues to expand into these two fields of wireless and wireline, investors should look forward to significant returns from both sides.
The best part is the investment in the billion-dollar infrastructure is behind Telus, which means that other companies will have to wait to even get close to where Telus is after today’s market crash. It also makes it ready to implement a 5G network well before any of its peers.
Telus didn’t even budge during the last recession, and after a short downfall, this stock should continue on its merry way.
For investors that have bought this stock now, they could see a $10,000 investment turn into $13,380 in a year’s time. After that, expect some steady long-term gains from this blue-chip stock, with strong dividends of 5.23% as the cherry on top.
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 Amy Legate-Wolfe has no position in any of the stocks mentioned.