Iridium Communications (IRDM)

Iridium Communications (IRDM, 5.96) Buy Iridium (IRDM:NASDAQ) as a bounce back play on space communications. Iridium is a global leader in providing satellite communication services. The company sells voice and data communication services to areas that are hard to reach—places where cell phones and landlines are not available. ... The company...

Iridium Communications (IRDM, 5.96)

Buy Iridium (IRDM:NASDAQ) as a bounce back play on space communications. Iridium is a global leader in providing satellite communication services. The company sells voice and data communication services to areas that are hard to reach—places where cell phones and landlines are not available. ... The company missed earnings, reporting 19 cents a share compared with the 21 cents a share Wall Street was looking for. As you can see by the chart, the stock was crushed. This sell off is overdone. The company has a forward P/E of 6 and a PEG ratio of just 0.50. The rule of thumb is that if a PEG is below 1.0, the company is a buy.

Furthermore, the company just signed a $400 million five-year deal with the Department of Defense to provide satellite airtime services to meet its communications needs. This ensures steady cash-flow.

If you compare Iridium to its competitor Globalstar (GSAT: OTC), it is undervalued by more than half. GSAT has no P/E because it lost money last quarter. On the sales side, last year GSAT reported revenue of $78 million compared to IRDM’s $376 million. And yet IRDM has a market cap of just $430 million compared to GSAT’s $1.12 billion. IRDM could more than double and still be undervalued compared to its peer—that’s absurd.

Iridium has a short position of 17% of its shares as of October 15. This sets up a possible short squeeze on any positive announcement. Given the volatility of this stock, once it starts moving higher, the shorts will have to cover, which will boost share prices higher rapidly. ...

In 2011 and 2012, the stock bounced from these levels to above $9 for a quick 69% return. The bet is that it will happen again. Buy Iridium under $5.70 (current price: $5.61). Look to sell at $9.00 in July 2014. Put your stop loss in at $5.

Christian DeHaemer, Crisis and Opportunity, www.angelpub.com, 877-303-4529, November 15, 2013

Christian DeHaemer

Prior to being the editor of Crisis and Opportunity, Christian DeHaemer worked for 14 years as a senior analyst with such publications as Crisis Trader, Red Zone Profits, The GRESSOR and Taipan. Over the years, he has traveled to Cuba, Egypt, India and Bulgaria, among other frontier markets, in search of ridiculously low values and massive upside. He bought numerous gold mining stocks in November 2007 when they were trading for less than cash and were completely unwanted. One gold stock is up 303% in seven months; all are up triple digits. DeHaemer likes to buy fear with a cool hand while others are selling in panic. He bought oil wildcatters when the price per barrel was plummeting into the $30s; he took profits a few months later when oil was pushing $80.