Investing with the Thomsons - Thomson Reuters Inc.

Ok this is my non-energy play of the month! Unlike some of you I have never owned this stalwart, previously Cdn blue chip because it seemed always fully priced. With the recent market meltdown, it seems to have been beaten up unfairly. The merger with Reuters should account for over $1 billion in annual savings according to their press releases. This should increase margins. It is now a larger and more diversified supplier of news and professional data and publications. As well, you're investing with the billionare Thomson family and who wouldn't want to invest with this kind of pedigree?

It's valuation seems never cheaper. When it restores its regular dividend of $1.08 in November, it will yield 3.4% which has historically averaged 1.9% (it decreased its dividend during the merger to $0.91.) According to its 1st quarter report, all segments on a pro forma basis were growing strongly. Its forward P/E is 15 for what its worth.

The risk seems to be its Markets division which might be affected by the current market turbulence. I suppose a shrinking stock/bond/credit/real estate market has less need for data and information right? I think in volatile markets, information would be more valuable but we shall see as they will be reporting 2nd quarter results Aug. 12th. The Markets division contributed to profit in Q1 about 40% vs. 60% for the Professional division. Will this merger and its diversification prove to be TRI's saviour or downfall?

It has showed some bounce off it's July lows and I'm thinking of buying on any further weakness around it's earnings report!