Bottom-fishing for battered stocks may be a wise move for Canadian investors seeking to bet more bang for their loonie this new year. That said, hunting down marked-down stocks can come with its own fair share of risks, especially if the business under question faces immense pressure. Indeed, buying what you know is often the best move, especially when it comes to firms that see their share prices go on the descent. If you don’t fundamentally understand the business you’re investing in, it can be challenging to gauge how well a firm can turn a corner and when it will be able to do so.
Either way, do exercise extra caution when buying stocks that have shed a vast majority of their value in a hurry, as the deep-value glimmer may not be all that it seems! Additionally, do ensure you’ve got the time horizon (think at least four years) and are prepared to deal with even more volatile moves.
Of all the industries, the telecom scene has been the toughest place to invest these days. Undoubtedly, it’s not just Canada’s top telecoms that have felt growing pains. Many of the big firms south of the border are also in a tough spot. It’s an incredibly competitive and cost-intensive place to be.
And with interest rates still on the high end, questions linger as to how the telecoms can march higher again. Indeed, wireless subscriber growth and taking market share away from industry rivals is key to gaining ground. Going into 2025, the telecom stocks are limping, and while their dividend yields are swollen, it’s worth noting that not all of them are built to last. Some are due for the chopping block, while others will survive these profound industry headwinds.
Telus
Telus (TSX:T) is a massive dividend titan nowadays, with a yield that’s just north of the 8% mark. At less than $20 per share, T stock looks like a steal. Indeed, the name is at depths not seen in many years. And with a V-shaped recovery is not a given, I think the odds are on investors’ sides. Further, the dividend seems safe and sound at these levels.
The same cannot be said of some of Telus’s rivals. While it’s tough to get behind T stock after such an implosion in value, I think there’s reason for optimism this year, even as some analysts curb their expectations, ratings, and price targets on the group.
Telus stock has more than enough financial wiggle room to keep modest dividend hikes coming as it seeks to invest in opportunities to jolt its network relative to rivals. Of course, the industry storm could persist for a while longer (think two years or so), but of all firms in the telecom scene, Telus seems best poised to keep riding out the waves.
So, is the worst over for the telecoms? We’ll just have to wait and see.
Though the telecom stocks look as untimely as ever, I think contrarians may wish to hold their nose and buy a few shares of Telus (one of my favourite telecoms in this environment) at $19 and change. Seldom has such a robust dividend payer in the telecom scene traded at levels this cheap.
