A stock trading at or near 52-week lows can be a warning sign or it can be indicative of a big opportunity. Of course, it’s usually not that easy to know the difference in real-time, and only hindsight can shed perfect light on it. Yet, this is investing. There’s always risk involved. Our job as investors is to find opportunities that have the right risk/reward balance for our own individual needs and tolerances.
In this article, I’ll look into Telus Inc. (TSX: T), Canada’s now infamous telecom stock that was once an investor darling and an example of shareholder pride. Telus’ stock price is currently trading at a mere $12. It’s down 45% in the last year and 57% in the last five years.
Here’s why, in my book, Telus stock is a buy.
Source: Getty Images
Telecom assets
There’s little doubt that the Canadian telecom sector needs greater regulatory support. For an essential industry like the telecom industry to survive and thrive, it needs to operate within an environment where it can profitably grow and compete with the necessary capital to support its growth.
The world is rapidly changing, modernizing, digitizing, and of course, incorporating artificial intelligence (AI) into everything. The telecom industry is essential in order for the world to take these giant leaps into the future.
Yet, government policies have not nurtured investment into the very industry that will enable all of this. The telecom industry is highly leveraged due to the massive infrastructure build that’s required, and as the world moves forward, a lot more will be asked of the telecom industry. Investing in digital infrastructure will be essential.
Yet, the regulatory environment is focused on the lowest-cost providers. This has knocked off significant dollars of market cap in the industry. And it has left telecom companies like Telus stock struggling.
Telus stock refocuses
In all of this, Telus’ business is holding its own. The company has chosen to remain a rational player and to not compete on price alone. The company is taking its hits, but by focusing on value-added as opposed to being a lowest-cost provider, it’s maintaining a standard of excellence.
This has not been an easy task for Telus stock, as evidenced by its changing 2026 guidance. Revenue is expected to be flat to down 2%, and free cash flow is now expected to come in at $1.8 billion (down from the initial $2.45 billion guidance). And we all know what happened to Telus stock’s dividend – down 55%.
Telus’ value proposition
Telus stock’s value lies in the value of its telecom assets and brand, and its extensive footprint of telecom assets that are highly undervalued at this time. Looking ahead, Telus is working on rebuilding and refocusing. Its telecom business has a big opportunity with the continued rollout and expansion of pure fibre leadership, and in streamlining the business.
Also, Telus is looking to divest some of its other very successful businesses, such as Telus Health. Monetizing these businesses will provide Telus with the much-needed capital to focus on the core telecom business, as well as on the AI opportunity.
The AI opportunity involves connecting existing data centres to the Telus grid. Data centres need energy providers as well as telecom providers to connect everything and function properly. The opportunity also involves establishing sovereign data centres in order to ensure protection, security, control, and autonomy.
The bottom line
Clearly, investing in Telus stock is not without its risks. But for those investors who believe in the importance of the telecom sector and the resiliency of it, Telus’ stock price is looking quite cheap and the stock is looking like a really attractive buy right now.
