A Stock for the Smart Phone Revolution
Stock Market Analysis Video
In Case You Missed It
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I’d been planning to write something about Apple’s new iPhone 4 for some time, but I wanted to wait until I actually got mine, which finally happened last Thursday.
So far, so (mostly) good with the iPhone. I was previously a Verizon (VZ) customer with a non-smart phone, which served me well over the years. But there came a point when I just felt I needed an iPhone, to check email on the go and to get directions, among other functions. I also love that it has a camera—one less gadget for me to carry around.
So far, besides my one dropped call (the reason for the “mostly” good), I haven’t experienced any of the technical difficulties reported by consumers and media outlets. According to Consumer Reports (among others), a problem can occur when holding the phone in a certain way that blocks the cell signal.
When I purchased my iPhone, I bought the recommended bumpers to avoid any catastrophes if it should fall and to get a better grip on the thing—it’s slippery! And apparently by using those, I’m avoiding any of the loss of signal problems.
However, Consumer Reports isn’t happy with the bumpers as a permanent solution and is not officially recommending the phone (despite calling it the best smart phone on the market, go figure!) because of the problem. Instead, the magazine is urging Apple to fix the phone free of charge.
Despite these issues, there’s no doubt that Apple has the hallmarks of a good growth company. It has an incredibly popular product (1.7 million iPhone 4’s sold in the first three days) and a seemingly endless stream of revolutionary, innovative products (iPod, iPhone, iPad).
But the stock already had a great run last year (and at other times in its history) and it has chopped around a lot since the stock market correction began in May. It’s also possible that the stock is already too well loved and thus will never again realize the monster gains young, unknown growth companies will.
In that vein, today, I’m going to recommend a stock that’s a beneficiary of the smart phone market, but doesn’t actually make any phones or any of the components in them.
The company is American Tower (AMT) and although it’s based in Boston, it has a wide presence in the U.S. and around the world. It was recently recommended by Cabot Top Ten Weekly Editor Michael Cintolo, who wrote:
“The iPhones, Blackberries, flip phones and candy-bar cell phones of the world share one big requirement: They all need cell phone towers to get their signals. And the continuing competition among the world’s cellular service providers to extend and upgrade their networks is the ruling reason behind the success of American Tower. Massachusetts-based American Tower has a global portfolio of about 30,000 wireless and broadcast communication sites, with more being developed all the time. These sites range from mountain tops to rooftops, and stretch across the U.S., Mexico, Brazil and India. The company has just announced that it will begin operations in Chile soon, having just inked a deal to acquire up to 287 tower sites from Telefonica Chile. Revenue growth is rising at an increasing rate (up from 10% in Q4 to 12% in Q1) and earnings were up a notable 72% in the most recent quarter. With a customer base that includes AT&T, Sprint Nextel, Verizon Wireless and T-Mobile, American Tower is benefiting from the boom in the wireless sector.
“AMT isn’t a rocket shot, but the stock is pushing out into multi-year highs. The stock declined in an orderly way from its January high of 45 to support at 38 in May, then staged a strong rally back to 46, completing a cup pattern. A two-week correction to 43 put a handle on the cup and the stock then soared to 47 on good volume. The stock has now corrected to support at 46. AMT is liquid, and a little sideways action would make a good buying opportunity.”
For more details on American Tower and other top stocks, click here.
http://www.cabot.net/info/ctt/cttkb05.aspx?source=wc01
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Now on to the Weekly Stock Market Analysis video with Cabot Market Letter Editor Michael Cintolo.
Mike says that there is good news this week as one of Cabot’s key market timing indicators turned positive. He also discusses methods of finding good stocks going into this new market action. Stocks discussed include Baidu (BIDU), VMWare (VMW), Salesforce.com (CRM) and Dr. Reddy’s Labs (RDY).
http://www.cabot.net/Videos/Stock-Market-Analysis-Video/2010/CWR-071610.aspx
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In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, I have links below to each issue.
Cabot Wealth Advisory 7/12/10 –The Tractor Story
On Monday, Timothy Lutts wrote about his 1948 Ford 8N tractor and whether he should keep it or look for a newer model. Due to your overwhelming response (the most ever!), Tim will be doing a follow-up featuring many of your letters in the future. Tim also discussed an organic grocery store that’s a likely long-term winner as well as a stock that was recently named Editor’s Choice in Cabot Top Ten Weekly.. Featured stocks: Whole Foods Market (WFMI) and NetApp (NTAP).
http://www.cabot.net/Issues/CWA/Archives/2010/07/Watch-List-Stock.aspx
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Cabot Wealth Advisory 7/13/10 – Don’t Buy a Dividend Stock Until You Read This
On Tuesday, we featured an article from Carla Pasternak, Editor of High-Yield Investing at StreetAuthority, on why now is the time to play defense. Carla discussed the importance of looking to stocks with long histories of steady and rising dividends.
http://www.cabot.net/Issues/CWA/Archives/2010/07/Dividend-Stocks.aspx
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Cabot Wealth Advisory 7/15/10 – How to Find Bargain Stocks
On Thursday, J. Royden Ward wrote about a way to find bargain stocks that was developed by the father of value investing, Benjamin Graham. Roy then used that method, called Net Current Asset Value, to recommend a stock in an industry with great potential. Featured stock: HQ Sustainable Maritime Industries (HQS).
http://www.cabot.net/Issues/CWA/Archives/2010/07/Find-a-Bargain-Stock.aspx
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Until next time,
Elyse Andrews
Editor of Cabot Wealth Advisory