I’m calling bottom on Telus, Greg Newman says

Fund manager Greg Newman of Newman Group ScotiaMcLeod says he is “going out on a limb” by making Telus (Telus Stock Quote, Chart, News, Analysts, Financials TSX:T) one of his top picks.

Appearing on BNN Bloomberg’s “Market Call” March 28, Newman acknowledged that the reason for Telus’s sharp fall of late are no mystery.

“You are trying to pick a bottom, which is always hard to do, he said. “I am looking for a name that is probably washed out, multi-year lows. What’s the culprit? The culprit is too much debt, CRTC decisions that haven’t been perfect, four carriers instead of three and, all of a sudden, a world in which we are facing less immigration in Canada, which was a real tailwind for growth.”

But Newman says after running down the obvious negatives there are some compelling reasons to like Telus right now.

“You can get a 8% dividend on this name, which I think is safer than BCE’s, and much more reasonable valuation than it has been,” he argued. “2025 is not a great year, but decent growth beyond that -we’re modeling about 13%. When you stick on that growth rate with an 8% dividend and with catalysts like asset sales and a credible path to make their balance sheet better -people are always asking me what’s wrong with these telcos- it’s their balance sheets. If they can get their balance sheets in better shape I think the stocks will work. I am trying to find stocks that are pretty washed out and I think Telus is one of them.