Communications services and consumer discretionary stocks were out of favour in 2024 but are experiencing a resurgence in 2025. Both sectors are up +15.8% year to date and holding strong amid an ongoing trade war. Canada’s economic resilience and the “risk on” market sentiment have contributed to the mild bull runs.
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Resounding comeback
Fierce competition and slower growth put downward pressure on telco stocks in 2024. TELUS (TSX: T) struggled for most of the year but has regained investors’ confidence. At $22.97 per share, current investors enjoy a market-beating +22.21% year-to-date return. The mouth-watering 7.25% dividend yield is a magnet for income-focused investors.
In the second quarter (Q2) of 2025, TELUS reported a 2% and 11% year-over-year increase in operating revenues and free cash flow (FCF) to $5.1 billion and $535 million, respectively. However, the $35 billion telco giant incurred a net loss of $245 million compared to the net income of $221 million in Q2 2024.
According to its executive vice-president and chief financial officer, Doug French, the significant increase in FCF underscores a solid financial foundation to support TELUS’s sustainable growth and transparent capital-allocation priorities. “Looking ahead through 2025, we are well-positioned to drive strong, sustainable performance as we maintain our focus on profitable growth,” he added.
The bright spots for the telco are TELUS Tech solutions across mobile and fixed services, TELUS Health, and TELUS Digital. Furthermore, the $2 billion investment during the quarter aims to expand broadband services in Ontario and Quebec. It should also drive national scale and competitive advantage. Management targets consolidated FCF of approximately $2.15 billion by the end of 2025.
TELUS not only provides or facilitates access to essential communications services, but it is also an investor-friendly company. Despite the $285 million impairment in Q2 2025, the board approved a 7% increase in the quarterly dividend.
More importantly, the dividend hike indicates management’s confidence in future cash flows. TELUS aims to maintain its dividend-growth program, including semi-annual dividend increases in the range of 3% to 8%, from 2026 through year-end 2028.
Booming pet industry
Pet Valu Holdings (TSX: PET) has surged +22.85% in the last three months and continues to rise. At $38.76 per share, the year-to-date gain is +55.37%. This consumer discretionary stock also pays quarterly dividends (1.27% yield).
The $2.64 billion company is Canada’s leading pet food and accessory retailer. On August 27, 2025, Pet Valu locked in new, lower prices for over 100 popular products, including food, treats, and toys.
In Q2 2025, the top and bottom lines rose 5.8% and 22.3% to $280.6 million and $21.8 million, respectively, compared to Q2 2024. FCF increased 251.95% to $27.1 million from a year ago. Pet Valu has 833 corporate-owned and franchised locations across Canada, with e-commerce capabilities. The long-term growth goal is to have more than 1,200 stores.
Besides good management, Pet Valu’s key strengths include a large network of specialty pet stores, expansion into key markets, and a visible track record of long-term profitability. PET carries a “buy” rating from market analysts.
Winning investments
TELUS has rebounded from its slump, while Pet Valu is scaling new heights in the booming pet industry. Their stock performances reflect positive investor sentiment and a favourable business outlook. Both stocks should hold steady and be among the winning investments in 2025.
