Telus Corp.
Toronto symbol T.A, provides local and long distance telephone service in B.C., Alberta and parts of Quebec, and wireless service across Canada.
We’ve often pointed out that perhaps a third of your stocks will perform much better than you expect. Telus, up nine-fold from its 2002 low, is a good example. It’s also a good example of why we never set target prices for our recommendations. Targets spur investors to quit buying or even sell our best picks way too early. If we had to offer a sell target for Telus in mid-2002, we might have guessed $10 — even $15. But if you sold at that price, you’d have missed out on the subsequent rise to recent highs near $50. That’s why we focus on investment value. It’s a far better tool than sell targets for filling your portfolio with performers like Telus.
TELUS CORP. (Toronto symbols T $44 and T.NV $44; SI Rating: Above average) is Canada’s second-largest telecommunications provider, after BCE Inc. It provides local and long distance telephone services to roughly 5 million customers, mainly in Alberta, British Columbia and parts of Quebec. It also provides Internet access services to roughly 1 million subscribers. Telus’s revenue slipped from $7.1 billion in 2001 to $7.0 billion in 2002, but rose to $8.1 billion in 2005. It lost $0.51 a share (total $145.8 million) from continuing operations in 2001, as well as $0.75 a share ($235.8 million) in 2002, mainly due to restructuring costs following the Clearnet acquisition. However, earnings improved from $0.92 a share ($324.4 million) in 2003 to $1.94 a share ($700.3 million) in 2005. Most of Telus’s recent growth comes from its wireless division, which is Canada’s largest wireless service provider with 4.5 million customers (36% of the market). The company is also doing a good job of hanging on to its customers, and getting them to sign long-term service contracts....
In 2000, Telus Corp. acquired money-losing wireless provider Clearnet. It looked like a bad move at the time, but it has paid off. In 2005, wireless provided 40% of Telus’s revenue, 44% of its profit and 53% of its cash flow. New services such as video, music and game downloads should continue to spur wireless demand, and Telus’s profits. The stock has risen nine-fold (see box next page) in the past few years, but we foresee further gains. TELUS CORP. (Toronto symbols T $44 and T.NV $44; SI Rating: Above average) is Canada’s second-largest telecommunications provider, after BCE Inc. It provides local and long distance telephone services to roughly 5 million customers, mainly in Alberta, British Columbia and parts of Quebec. It also provides Internet access services to roughly 1 million subscribers. Telus’s revenue slipped from $7.1 billion in 2001 to $7.0 billion in 2002, but rose to $8.1 billion in 2005. It lost $0.51 a share (total $145.8 million) from continuing operations in 2001, as well as $0.75 a share ($235.8 million) in 2002, mainly due to restructuring costs following the Clearnet acquisition. However, earnings improved from $0.92 a share ($324.4 million) in 2003 to $1.94 a share ($700.3 million) in 2005....
FIDELITY TRUE NORTH FUND $26.61 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies. Fidelity True North Fund’s top holdings include high-quality stocks such as Manulife Financial, EnCana, TD Bank, Sun Life, CN Railway, Canadian Natural Resources, Bank of Nova Scotia, Telus Corp. and Talisman Energy. The fund’s breakdown by economic sector is: 31.2% in Financials, 21.5% in Energy, 14.7% in Materials, 8.2% in Industrials, 7.2% in Telecom, 6.5% in Information technology and 4.3% in Consumer discretionary....