Stocks To Watch in 2018 – by Gordon PapePublished on January 2nd in his Internet Wealth Builder Report – Here are five stocks I’m going to be watching especially closely and the reasons why.
Enbridge, Amazon, Suncor Energy, Teck Resources and Torstar. Here is what he had to say about Torstar:
Nobody wants to invest in newspapers. They’re losing print advertising at an alarming rate and in most cases their digital platforms have not been able to offset the losses. So it’s not surprising that this company, which publishes Canada’s largest circulation newspaper, The Toronto Star, has been a market disaster in recent years. In 2014, the shares traded for more than $8 in Toronto. As I write, they are $1.71. The latest quarterly results showed more losses, despite stringent cost cutting.
However, reader Dave Lester, a retired investor with a background in finance, has been actively following the stock and notes there are some unusual things happening behind the scenes. Fairfax Financial, run by canny investor Prem Watsa, who has been called the Warren Buffett of Canada, recently spent $11.8 million to increase its holding of Torstar’s non-voting shares to 40.6%. Why?
Good question. Fairfax has not asked for a board seat but says it is willing to consult with management on turning around the company. There are suggestions the ultimate goal is to take Torstar private.
Meantime, Torstar has been doing deals with another troubled media giant, Postmedia, one of which involved swapping a series of community papers, most of which were promptly closed. Could that be the precursor to a merger that would combine their most valuable assets, while shedding the rest?
Despite recent losses, Torstar has more than $60 million in cash and no bank indebtedness. The stock continues to pay a small quarterly dividend of $0.025 to yield 5.8%. This stock could conceivably go to zero. But if Fairfax successfully applies its turnaround and/or a deal emerges with Postmedia, this stock could soar. It’s not an Internet Wealth Builder recommendation because of the risk, but it is worth watching as an indicator of the future for print media in Canada.