TRANSCONTINENTAL INC. $16 - Toronto symbol TCL.A

TRANSCONTINENTAL INC. $16 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.0 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.0%; TSINetwork Rating: Average; www.tctranscontinental.com) is Canada’s leading printer of flyers, magazines, newspapers and books. It also publishes magazines and newspapers.

In May 2014, the company paid $133 million U.S. for Missouri-based Capri Packaging, which makes plastic bags and pouches for cheese and yogurt producers. Transcontinental feels it can use its printing expertise to make Capri more efficient. The purchase will add $72 million U.S. to its annual revenue of $2.1 billion (Canadian).

The company also recently agreed to pay $75 million for 74 community newspapers in Quebec, along with their websites. The seller is Sun Media, a subsidiary of Quebecor (Toronto symbol QBR.B).

To win regulatory approval for the deal, Transcontinental agreed to sell 33 of its Quebec newspapers: 11 that it already owned and 22 of the Sun Media publications. So far, the company has agreed to sell 14 papers for an undisclosed sum. Regulators will probably let it hang on to the 19 that it hasn’t been able to sell.

The stock trades at just 7.9 times the $2.02 a share the company should earn in the fiscal year ending October 31, 2014. The $0.64 dividend yields 4.0%.

Transcontinental is a buy.

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