Transcontinental’s shift was the right move

Article Excerpt

TRANSCONTINENTAL INC. $15 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares o/s: 87.3 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.4; Dividend yield: 5.9%; TSINetwork Rating: Average; has in the past few years cut its dependence on its traditional commercial printing operations. That’s because advertisers are opting for online ads instead of printed flyers. As part of that strategy, Transcontinental paid $1.7 billion for Chicago-based Coveris Americas in May 2018. That firm makes plastic packaging for consumer and industrial products at plants in the U.S., Canada, the U.K., Ecuador, Guatemala, Mexico, New Zealand and China. Packaging is now its biggest business With the Coveris purchase, the company now gets 53% of its revenue from its less-cyclical packaging division. Printing provides a further 44%, while its publishing operations (mainly textbooks and specialty magazines) account for the remaining 3%. As part of its new focus, Transcontinental is selling most of its newspaper publishing operations. That’s why the company’s revenue rose just 1.5%, from $1.99…

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