Perhaps one of my favorite value plays currently on the TSX is Shaw Communications Inc. (TSX:SJR.B), for a number of reasons. With the recent acquisition of Freedom Mobile, Shaw has declared its intention to move full speed into the wireless carrier space, looking to take market share away from industry leading giants Rogers Communications Inc. (TSX:RCI.B) BCE Inc. (TSX:BCE)(NYSE:BCE) and Telus Corporation (TSX:T)(NYSE:TU).
In the Canadian wireless provider space, margins are high and companies are very protective of pricing and margins, something Shaw is well-positioned to challenge, lowering prices for consumers and chipping away at market share which was once "locked in" to one of the big three Canadian carriers.
That said, Shaw’s stock price has not reflected this sort of consumer excitement of late. Shaw recently reported earnings which underwhelmed investors and led to a significant decline in the company’s stock price, with shares sliding more than 7% since last Wednesday on the news that subscriber growth came in lower than expected (20,000 new subscribers instead of 28,000) although revenue and earnings came in basically exactly at analyst expectations.
Shaw is a company which is growing quickly, yet the business does have a loyal customer base which provides the business with revenue and profit in good times and in bad. With the growth initiatives currently in place, as well as an excellent management team which should be able to execute on the company’s long-term vision over the next few years, I expect Shaw to broadly outperform the other big three Canadian telecommunications companies in the coming years.
Invest wisely, my friends.
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