Categories: All postsInterviews

BCE stock is becoming downright cheap, this investor says

Ross Healy

Shares of telecom giant BCE Inc. (BCE Stock Quote, Chart TSX:BCE, NYSE:BCE) has been heading south for a good four months now. Is there sign of a turnaround?

Probably not in the near term, says Ross Healy of Strategic Analysis Corp., who nevertheless believes there’s a buying opportunity coming up.

BCE’s slide has taken it from a high of $62.90 on December 13 steadily down to where the stock now sits as of Friday’s trading at $53.62. For one of Canada’s blue chips, that 14.8 per cent drop is significant, but it could also make for a cheap pickup, as the stock comes with an ever-more-attractive dividend of $0.775 per share per quarter which is now heading towards 6.0 per cent yield territory.

The drop off has been blamed on rising interest rates, which impact BCE’s debt but also make it that much more attractive for conservative investors to park their money elsewhere, even with the alluring yield.

Healy says that the stock could head lower over the short term.

“When I look at the chart of BCE, which is just kind of fading, it’s not collapsing. It’s like, no earnings growth, no fair market value growth despite the nice dividend,” he told BNN. “I wouldn’t be surprised if the stock came back a little bit further, maybe another ten or fifteen percent. I think it would then get pretty darn safe because it’s getting quite cheap. But as I say, the market’s gotten to a point where it doesn’t care, and after that, what do you do? You go someplace else.”

Healy interprets the BCE’s downwards and sideways trading as a sign that it’s hit up against its ceiling. “BCE peaked precisely at our fair market value a little while ago and it’s been trying to go higher but the earnings won’t come in,” he says. “What’s happening is that the market will try and try for a while and then it’ll go, ‘Okay, if you’re not going to cooperate, I’m going someplace else.’”

The trend is not exclusive to BCE, as the other two of Canada’s Big Three, Telus Corp and Rogers Communication, are also down since December. And while Shaw Communications sits in fourth spot, it is challenging the others for dominance through strong growth in its wireless subscriptions.

We Hate Paywalls Too!

At Cantech Letter we prize independent journalism like you do. And we don't care for paywalls and popups and all that noise That's why we need your support. If you value getting your daily information from the experts, won't you help us? No donation is too small.

Make a one-time or recurring donation

Tagged with: bce
Jayson MacLean

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.

Recent Posts

SSTI is a buy, Roth says

Its first quarter results are in the book and Roth MKM analyst Richard K Baldry is still bullish on SoundThinking… [Read More]

9 hours ago

GLXY wins price target raise at ATB Capital

Following the company's first quarter results, ATB Capital Markets analyst Martin Toner has raised his price target on Galaxy Digital… [Read More]

18 hours ago

Paradigm cuts price target on TTNM

Following first quarter results he describes as "mixed" Paradigm Capital analyst Alexandra Ricci has cut her price target on Titanium… [Read More]

19 hours ago

Buy ATS ahead of Q4 earnings, Stifel says

Ahead of the company's fourth quarter earnings report, due May 16, Stifel analyst Justin Keywood says ATS Corp (ATS Corp… [Read More]

2 days ago

Ormat Technologies is a buy, Roth says

Its first quarter results are in the books and Roth MKM analyst Justin Clare thinks there is money to be… [Read More]

2 days ago

Cannabist stock is a buy, Beacon says

Beacon analyst Russell Stanley says the most recent results were better than expected for The Cannabist Company (The Cannabist Company… [Read More]

2 days ago