Telecom Stocks Showing Resilience Both Sides of the Border

They are trading at a sizeable discount to their fair value estimates, which makes them attractive investment prospects

Vikram Barhat 3 June, 2020 | 12:43AM

Top of Telecom Tower

At a time when the COVID-19 pandemic has brought many sections of the global economy to a grinding halt, telecom operators are proving to be a reliable economic engine, helping a range of essential and non-essential businesses, institutions and individual consumers to continue to function, offer critical services, and, in many cases, survive.

Legacy telecommunications companies on both sides of the U.S.-Canada border have weathered the coronavirus crisis with relative ease. The fact that their stocks haven’t taken a beating as severe as those in other sectors, is an undeniable evidence of their safe-haven characteristics. Reliable phone and internet services are essential to modern life and business. For this reason, telecom companies enjoy a relative immunity from the vagaries of economic and natural forces.

Leading operators both in the U.S. and Canada have adapted their operations and services to help mitigate the impact of the virus both on their bottom line and their consumers’ lives.  Beyond the short-term consequences of the pandemic, these carriers are well placed on a long-term growth runway paved with a conspiracy of factors – 5G roll out, subscriber growth, remote working trend – as well as strong fundamentals. Their stocks are also trading at a sizeable discount to their fair value estimates, which makes them attractive investment prospects.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
AT&T Inc29.54 USD-1.34
BCE Inc54.84 CAD-0.74
Rogers Communications Inc Class B52.99 CAD-0.67
Verizon Communications Inc53.94 USD-1.51

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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