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BCE Inc is a clear Buy at these levels, this investor says


Investors looking for a solid idea to help them through these turbulent times should be piling into BCE Inc (BCE Inc Stock Quote, Charts, News, Analysts, Financials TSX:BCE), says portfolio manager Robert Gill, who thinks at these prices BCE is a no-brainer.

“This is a high quality company and it’s about as blue chip as you can get in Canada,” said Gill, senior vice president at Goodreid Investment Counsel, who spoke on BNN Bloomberg on Wednesday.

BCE reported in-line financial results on Thursday for its fourth quarter 2022, coming in with operating revenues up 3.7 per cent year-over-year to $6.439 billion and adjusted EBITDA up 0.3 per cent to $2.437 billion. Adjusted EPS was at $0.71 per share. Analysts had been calling for revenue of $6.39 billion and EPS at $0.72 per share.

Management touted the company’s infrastructure build-out, which saw 854,000 new locations added to its fibre network in 2022 and a projected 650,000 more over 2023.

“We’ll continue investing in and expanding our 5G and 5G+ networks. I am so pleased with how far we’ve come in such a short period of time to competitively position ourselves for future success,” said President and CEO Mirko Bibic in a press release.

BCE said higher interest rates and higher depreciation and amortization expenses will likely impact earnings per share this year, while at the same time lower capex as well as lower employee benefits payouts should increase EBITDA. Management’s guidance is for revenue growth of between one and five per cent in 2023, an adjusted EPS decline of between three and seven per cent and an increase in adjusted EBITDA of between two and five per cent.

BCE’s share price rose sharply in 2021 but had an off year in 2022, leaving the stock at about the same place it was three years ago. But Gill thinks the current lull has little to do with the company or its operations and is more a reflection of the times, meaning at current levels the stock should be a great pick-up for the long term.

“They’ve got stable, recurring revenues, and what happened was the share price basically declined on the back of a very rapidly changing macro economic environment,” Gill said.

“There’s nothing specific or fundamental to change the thesis for BCE themselves, but the macro backdrop changed and that provides a buying opportunity,” he said. “We’re able to pick it up at a more attractive price to earnings multiple and also at a six per cent dividend yield.” 

“If you can buy a company of the quality of BCE with a six per cent dividend yield and you’ve got some capital appreciation baked into that, then it’s a great opportunity to do so,” Gill said.

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