Shares of Rogers Communications (TSX:RCI.B) have really gained momentum in recent weeks, with shares adding just over 5% to their value after last week. The telecom world is a very difficult place for investors to stay in, to say the least. Competition remains fierce and spending expectations really seem quite high.
But with interest rates on the decline (and likely more rate cuts on the way from the Bank of Canada in the coming quarters) and a huge sports season looming, I think Rogers could finally be worth careful consideration, especially since he’s spent the better part of the last two years in the penalty box. However, since bottoming in April, Rogers shares have been off the shelf and in breakout mode. With the latest stock rally, I think the nearly $30 billion telecom sector has finally reached an inflection point, so to speak.
The Blue Jays are going to the World Series: That’s a home run for Rogers stock!
While it’s tough to look for down stocks, I think Rogers stock has the makings of a sustainable contender as the sport looks to take strength to the next level as the hockey season gets off to a hot start and the Toronto Blue Jays punch their ticket to the World Series. It will indeed be a fun fall for Canadian sports fans and perhaps an even more fun quarter for Rogers Communications shareholders. If the Jays win the World Series (and I think they will), look for a wave of new fans to follow the Jays closely in the years to come.
Championships indeed win over new generations of fans. And with many Canadians looking to get in on the action (myself included), the ratings could very well have the potential to surpass even the most aggressive estimates. Certainly, Sportsnet Plus has received a lot of criticism for its recent price increases. But for many Canadians, it’s either pay the price of admission or risk missing a historic moment in Canadian sports.
Don’t bet against the latest rise in stock prices
Add in the NHL and NBA seasons and Sportsnet Plus could very well be just as sticky, if not stickier, than those of other streaming platforms. Either way, I think the latest rally in the chase could be worth chasing, even if they’ve already been a huge grand slam for investors who bought the dip at the start of the year when RCI.B shares were hovering below $35 per share. Ultimately, Rogers is in the right place at the right time, as the sports world is finally looking for dividends.
Despite the latest wave of strength, RCI.B shares are still down significantly (about 26%) from their previous record highs. The big question going forward is whether new highs (think $77 or so) can be reached at some point in the medium term. With a little help from the Jays and the Bank of Canada (more rate cuts coming?), I think shares of Rogers Communications look like a great buy on strength. There’s still a nice 3.7% yield to get behind.
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