Q: Hello, I saw a report from NBF on Cogeco that intrigued me because their target return is 36% (incl. div) in the next 12 months. What’s your opinion of this co? Thanks
5i Research Answer:
The sector has been weak, and there is not a lot of growth. However, this is largely reflected in the very low valuation of CCA, at 8X earnings, with a 5.7% dividend. Debt is very high, and earnings are basically where they were five or six years ago. Cash flow is decent, and we would not have huge concerns on the dividend. The stock is up 12% in the past year. We might not expect 36%. Target prices are often not met. We would consider it OK but not really a compelling buy.