Shaw Communications range bound while digesting Canwest acquisition

Dec 13th, 2010 – 1 Comment

Hi Lou, What is your view for Shaw Comm (sjr.b). Thanks Monty Richmondhill,Ont Hi Monty, Shaw Communications Inc. ( SJR.B TSX) has been dealing with  competitive pressures in the cable and telecommunications sector that has seen new entrants  come into the market and renewed vigor from existing carriers.In addition the company has to integrate the television assets it acquired […]


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Telecommunications.


Hi Lou,
What is your view for Shaw Comm (sjr.b).
Thanks

Monty
Richmondhill,Ont

Hi Monty,

Shaw Communications Inc. ( SJR.B TSX) has been dealing with  competitive pressures in the cable and telecommunications sector that has seen new entrants  come into the market and renewed vigor from existing carriers.In addition the company has to integrate the television assets it acquired in the purchase of  bankrupt Canwest Global Communications. Finally  SJR has to manage succession issues as Jim Shaw stepped down earlier than expected from his post as CEO making room for his younger brother Brad.

The biggest risk in my view is the acquisition of the Canwest television stations. The specialty cable stations that came in the deal are by far the better piece of the package given that they earn fees from cable operators as mandated by the Canadian Radio Television Commission. Its always nice to own a regulated monopoly. The over the air network that lives and dies by the sale of advertising looks like a broken business model that needs some serious cost cutting to align itself with the reduced advertising revenue that has been the norm since 2008.

The charts will provide some indication as to trend, support, and resistance into 2011.

The three year chart illustrates the choppy trading in the stock within a range. Support since 2008 is visible at $18.50 with resistance at $23.50. SJR.B has cycled through the range three times since March of 2008. Not a bad return of 27.02%  on a bottom to top ride.

The six month chart depicts the sell off that started in late October as Jim Shaw announced his retirement and the Q4 results missed the street. It is now holding onto support at $20.50 along the 200 day moving average. Both the RSI and MACD seem to be signalling a move off support but don’t expect a break above $23.50. In order to get the stock moving on a new sustained uptrend it will require a series of quarterly reports that beat the street and evidence that its chewing down on the Canwest acquisition.

What you have to like about SJR.B is the dividend which at these levels is producing a yield of 4.3% .Not bad in today’s environment. Its always sweet to be paid to wait for the sun to shine.

Happy Capitalism!

Categories: Telecommunications
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media