Q: Is there any hope for Transcontinental? I am seriously underwater. Sadly it’s in a registered account so there is no benefit to tax loss selling. Buy, sell or hold?
5i Research Answer:
With its packaging acquisition a few years back we thought there would be a turnaround. EPS has improved a bit, and is forecast to grow a bit in 2024, but earnings still remain below levels of a decade ago. Debt is high, but has declined somewhat. It is now about 2X cash flow, at a more manageable level. It is very cheap at 6X earnings, but has been a 'value trap' for a long time. With rates falling, the stock has the potential to do better in 2024. The dividend can't be considered 100% safe but we would not expect a cut unless earnings deteriorate. We would give this a few quarters to see if rates improve its valuation. But we would temper expectations here, and for a registered account we could list dozens of 'better' ''growth' ideas.