Thomson Corporation: Good News For Investors

After a brutal week last week, Toronto’s main stock market jumped Monday, as did the U.S. market. With this backdrop of doom and gloom, my conservative approach to investing is that much more relevant.

The Thomson Corporation is an information content provider play that bodes well for our wired future. Thomson trades on the TSX (Toronto Stock Exchange) and NYSE (New York Stock Exchange) with symbol TOC.

Thomson Corp is an information service provider that has successfully transitioned from a print media-centric company into an electronic media force that is gaining more and more momentum, recently agreeing to buy Reuters, the 156-year-old news service, for about 8.7 billion pounds ($17.9 billion) - talks are still underway.

In addition to a massive newspaper business, Thomson has several other divisions. One of the best is Thomson Legal & Regulatory, which provides information and software-based solutions for legal, tax, accounting, intellectual property, compliance and other business professionals, and government agencies.

Another division is Thomson Financial, which provides products and integration services to financial and technology professionals in the corporate, investment banking, institutional, retail wealth management and fixed income sectors of the global financial community.

Lastly, Thomson Scientific & Healthcare provides information and services to researchers, physicians and other professionals in the healthcare, academic, scientific, corporate and government marketplaces.

Just this month, Thomson completed the sale of the higher education, careers and library reference assets of Thomson Learning as well as the sale of Nelson Canada to a consortium of funds. In March 2007, Thomson sold NETg, an electronic education software and delivery platform.

Thomson reported earnings July 26, 2007 that were ahead of expectations, with EBITDA of US$534 million vs. consensus of US$511 million:

Revenues increase 11%; organic revenue up 6%; Operating profit grows 15%; operating profit margin increases in all segments; Diluted EPS increases to $0.58, from $0.26 a year ago.

The upside came from stronger than expected revenue growth, high margins in the Legal division and lower corporate costs.

Good management, solid economic performance and a strong future for electronic information are all reasons to buy Thomson. There is a strong buy rating consensus among analysts; RBC gives TOC a price target of $51 with above average performance and minimal risk. I consider this a conservative investment inline with my principles of a slow but steady stock that will increase moderately over the next 12 - 18 months.

If you are looking for a safe but potentially lucrative information-media angle to your portfolio, this might be the right stock for you.

DISCLOSURE: I do not own shares in Thomson at the time of this writing.

Comments

[marcello.mo...:]

Thomson does not own any newspapers much less "a massive newspaper division". You lost all credibility.

2007 Jul 31 08:31 AM

[lenny247:]

Technically you are correct and TOC does not own any newspapers directly, anymore– my bad. Since I was covering the stock specifically, I should have left that one sentence out. However, Thomson USED to own a TON of newspapers, most notably, the Globe and Mail (the only good newspaper in Canada imo). Though TOC does not own the Globe anymore, the Thomson family has served as the figureheads of the paper since 1980. Through its holding company Woodbridge, and as the largest shareholder with a 40-percent stake in Bell Globemeida, the Thomson familly actaully have control of the Globe. Thus, I always associate the Thomson familly with the Globe. Of course, I’m sure you knew all of this when you posted your rude comment about me losing all credibility, but decided to be brief – very impressive. However, before I throw in the towell, let’s see how TOC does over the next year and then come talk to me about credibility – the stock market does not lie. inspectorSTOCK.com … we put the OCK, in stock.

2007 Aug 03 09:17 AM