This Canadian Telecom Stock Is a Great Value Buy

Rogers Communications (TSX:RCI.B) stock looks too cheap to ignore, given potential catalysts up ahead.

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Canadian telecom stocks are great defensive dividend plays to ready up for a potential mild recession. Indeed, telecoms still stand to be rocked by macro headwinds. As consumers feel financial pressure, mobile bills, and device upgrades could be delayed until the times improve.

Though the telecom scene isn’t the best place to shelter from volatility, I find their modest multiples and large dividend yields attractive for investors looking to get paid while they wait for any imminent “storm” to pass through the economy.

Further, select telecoms may sport a low beta, which implies a lower correlation to the TSX Index. A low-beta stock doesn’t tend to be influenced as much by the moves of the averages. Still, low beta doesn’t necessarily mean a lack of volatility. It just means a given stock is more likely to go its own way in any given trading session.

Rogers Communications: A telecom stock that could gain ground over peers

In this piece, we’ll check out Rogers Communications (TSX:RCI.B), a Canadian telecom that could be in a spot to take a bit of share away from its Big Three telecom incumbents over the coming months.

Undoubtedly, Rogers has made headlines in recent quarters for its acquisition of Shaw Communications, a deal that was heavily criticized by NDP leader Jaghmeet Singh. Though the deal puts more power in the hands of an already dominant telecom, I think recent moves made by Rogers could help put it back in the good books with Canadian wireless users.

The company recently decreased prices for some of its 5G mobile plans. Reportedly, the telecom tian reduced its per-gigabyte rate by 50%. That’s a big deal and a huge relief for many Canadians who are feeling the pinch of late. There is some fine print that should be considered, though.

First, the deals only seem to be good for the next 24 months when purchased alongside home services.

Second, automatic payments need to be set up to get the advertised sticker price.

Indeed, there are a few catches. Nonetheless, the added requirements aren’t necessarily a deal breaker. I think many Canadians will take interest in the deal, as they look to jump ship. There is no doubt that Canadians are hungry for a deal. And Rogers’s offers are some of the best we’ve seen in a while.

With Shaw aboard, I’d look for Rogers to attempt to take bundling to the next level. This could help Rogers gain a bit of ground over its peers on the front of wireless growth.

As mobile prices gravitate downward, I wouldn’t be shocked to see Rogers’s peers following up with offers of their own. For now, Rogers’s great deals seem more like a lengthy promo than the start of a “race to the bottom.” Promos are always a good thing for consumers. However, until rates can be taken down a notch on a permanent basis, the Canadian telecom scene will likely still lack in competitiveness, at least compared to the states.

The bottom line

Rogers stock trades at 18.63 times trailing price-to-earnings, with a 3.04% dividend yield. As Rogers trims prices or doubles data for existing plans, I think budget-constrained consumers will take notice and speak with their wallets. In that regard, I view Rogers as a telecom with the upper hand at this juncture.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications. The Motley Fool has a disclosure policy.

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