Opinions
Michael Underhill
Sba Communications Corp
SBAC-Q
TOP PICK
Jan 22, 2013
Stock price when the opinion was issued
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(A Top Pick Jan 22/13. Up 7.70%.) This is all about the tower business. A highly scalable, attractive economic model. Free cash flow generation. Strong management team. Have a global footprint. Buying the towers and leasing them back. Very little debt. Well-positioned for the next leg of the bull market in the next 18-24 months.
Tower businesses have been reclassified as REITs, and they are terrific businesses. Cell phones aren’t going away, and with all the changes going on and what you can put through the lines, these towers are going to continue to be valuable properties. Any pullback would be a great time to get in.
American Tower (AMT-N), Crown Castle International (CCI-N) or SBA Communications (SBAC-Q)? US REITs with cell towers in the US. You want to own these because they have multiple tenants. The average tower has 3 or 4 tenants. They can put more and more gear on them, so there is lots of room to grow revenues. The US is going through a boom on bandwidth, certainly wireless spectrum. Of the 3, he prefers American Tower, the most international of the group.
Towers have some of the best operating momentum of any sector globally. Globally we are trending towards a 4G world, iPhones, iPads, communications, etc. Largest 500 companies globally are doing more with less people by leveraging technology through bandwidth. Tower business is wonderfully attractive and highly scalable, both in developed and emerging markets. Took a little bit of a pause last month but with recovering economy companies will continue to reinvest in technology and things like communication. EPS is $1.33.