Investing.com -- Canadian telecom stocks have shown varying performance over the past year, with some companies delivering impressive returns while others struggle to gain momentum. According to WarrenAI, using Investing Pro’s metrics, Quebecor has emerged as the clear leader in the sector, followed by Rogers Communications, Cogeco, BCE, and TELUS.
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The Canadian telecom landscape features companies with strong dividend yields and varying growth trajectories. The rankings below consider fair value assessments, total returns, EBITDA margins, forward P/E ratios, dividend yields, and analyst price targets to identify the most promising investments in this sector.
1. Quebecor (TSX:QBR.A) – The Breakout Growth Leader
Quebecor tops the list with an impressive 59.7% one-year total return and a robust 35.4% EBITDA margin. The company boasts the highest ROE in the sector at 38.5%, demonstrating exceptional operational discipline. Trading at a forward P/E of 13.1x with a 2.8% dividend yield, Quebecor offers a compelling combination of growth and income. While its current price suggests it may be slightly overbought compared to its fair value of C$45.59, technical indicators remain bullish for the long term, and analysts project EPS growth of 17.5% in 2025.
In recent news, Quebecor reported its first-quarter 2024 results, noting a 22.4% increase in revenues to C$1.36 billion and a 25.1% rise in adjusted EBITDA to C$614.5 million.
2. Rogers Communications (NYSE:RCI) – The Value Recovery Play
Rogers Communications secures the second position with a 32% one-year return and sector-leading 44.7% EBITDA margin. With a fair value of $38.24, forward P/E of 10.2x, and 3.9% dividend yield, Rogers offers value potential. Most notably, analysts project a 57% upside from current levels – the highest among Canada’s "big three" telecoms. Recent upgrades and an improving cable/wireless mix signal positive momentum, though short-term technical indicators show some bearishness, potentially creating an entry opportunity for value investors.
Rogers Communications announced first-quarter 2024 total revenue of C$5.05 billion, a 28% increase, while adjusted EBITDA grew by 30% to C$2.23 billion. The company also reaffirmed its financial guidance for the year.
3. Cogeco Inc (TSX:CGO) – The Small-Cap Contrarian
Cogeco ranks third with a 34.9% one-year return and posts the sector’s highest dividend yield at 5.8%. The company stands out with the lowest forward P/E ratio (7.3x) and an impressive 47.8% EBITDA margin. Despite facing revenue challenges, Cogeco’s transformation plan and strong margins support its C$82.45 fair value assessment. Analysts project a 48.5% upside, making it attractive for value and income investors, though short-term technical indicators suggest caution.
For its second quarter of 2024, Cogeco Inc. reported a 1.1% decrease in revenue to C$746.1 million and a 0.3% decline in adjusted EBITDA. The company is maintaining its fiscal 2024 financial guidelines.
4. BCE Inc (NYSE:BCE) – The Defensive Income Giant
BCE takes fourth place with its legendary 55-year dividend payout streak and current 5% yield. However, its 14.6% one-year return lags sector leaders, and its 12.8x forward P/E is less compelling than peers. Recently upgraded by major banks, BCE appeals to defensive income investors despite negative revenue growth and high leverage (299.2% debt-to-equity ratio). Technical indicators remain neutral to bullish for longer timeframes, with analysts seeing a 52% upside potential.
BCE Inc. released its first-quarter 2024 earnings, showing a 0.7% decrease in total operating revenue to C$6.01 billion and a 2.0% decline in adjusted EBITDA. The company reaffirmed its annual guidance for 2024.
5. TELUS (NYSE:TU) – The High-Yield Caution Flag
TELUS rounds out the top five with a sector-leading 8.7% dividend yield but disappoints with just a 2.1% one-year return. Trading at a relatively high 19.2x forward P/E with the lowest EBITDA margin (28.2%) among ranked peers, TELUS faces margin pressure from its digital transformation initiatives. Analysts project a more modest 25.4% upside compared to other Canadian telecoms, suggesting investors should approach with caution despite the attractive yield.
TELUS reported a 0.6% increase in first-quarter 2024 operating revenues to C$4.96 billion, with adjusted EBITDA growing by 4.7%. The company also updated its annual financial targets for 2024.
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