Don’t wait around for a September pick-up in trading volumes and volatility. While September tends to be the time that many investors return from their vacation to take action on stocks, a market correction or pullback is no guarantee. In fact, investors may be returning to a considerable amount of buying activity on the back of solid quarterly earnings results. Undoubtedly, it’s foolish (that’s a lower-case f) to make investment decisions based on something as arbitrary as the month.
So, market meltup or meltdown, investors should be ready to bag the bargains they see, because there’s no guarantee that they’ll stick around, even as the TSX Index goes longer without so much as a 5% pullback. That’s why I think it’s a great idea to do a bit of buying today in case that much-anticipated correction never strikes this autumn. The shocking nature of corrections makes them impossible to project. As such, take any short-term correction “calls” with a very fine grain of salt.
In this piece, we’ll have a closer look at three Canadian stocks that still look to be on sale as we head into the latter half of August 2021 and ever so closer to fall and a pick-up in trading volumes.
Consider Quebecor (TSX: QBR.B), one high-yield stock that recently went on sale in a relatively flat market. The name sports a well-covered (and growing) dividend yield of 3.6% at writing.
Quebecor: The Canadian telecom you need to know about
Quebecor is in the midst of a strategic pivot that has many investors hitting the pause button. The telecom firm, which had primarily served the province of Quebec (and some other French Canadian communities), had formed a pretty wide moat around its market of expertise.
Now, it’s looking to expand into new markets, one that could pay huge dividends if all goes well and the firm can capture a nice slice of the pie. It’s not going to be a cheap endeavour, though, or one without its fair share of risk. Quebecor and its Vidéotron brand aren’t well known outside of Quebec. As a result, a considerable amount of marketing spend can be expected.
Still, given how steep wireless services are, Quebecor could separate itself from the pack with more reasonably priced services, especially if it ends up scooping up Freedom Mobile, a discount carrier that could be up for grabs as a part of the recent Rogers–Shaw deal.
Nobody knows if the risks of expanding into new markets will be worth the reward. After a nearly 16% peak-to-trough plunge, however, I am a fan of the valuation and think the bar has been set low, with many investors scratching their heads over Quebecor’s ambitious long-term growth plans.
Quebecor: Expanding into new markets with a relatively unknown brand
As Quebecor moves into western provinces, I think the firm could be looking at a new subsidiary for itself. After all, Vidéotron may not find a spot with consumers outside of Quebec. Whether or not Quebecor adopts the “Freedom Mobile” banner if such a deal happens remains to be seen. Regardless, I think that switching costs will be low such that the company could carve out a pretty decent chunk of its target market for itself.
Could Quebecor become number four of the Big Four? Or will the Big Three stand their ground, leaving Quebecor with the scraps and, ultimately, a less-than-stellar return in its foray into new markets?
That’s the million-dollar question. Personally, I’d be inclined to give Pierre Karl Péladeau the benefit of the doubt, especially given investors seem skeptical amid the latest dip in shares.
