I mean, who doesn't have a mobile phone?
So, who are they? American Tower owns and operates roughly 180,000 cell towers throughout the U.S., Asia, Latin America, Europe, and the Middle East. It leases space on its towers to wireless service providers, which install equipment on the towers to support their wireless networks. The company has a very concentrated customer base, with most revenue in each market being generated by just the top few mobile carriers. The company operates more than 40,000 towers in the U.S., which accounted for more than half of its total revenue in 2019. Outside the U.S., American Tower's greatest presence is in India and Brazil, where it operates roughly 75,000 and 19,000 towers, respectively.
AMT flagged up to me due to their steady growth during the current pandemic. Even though we saw a large swing from $258 to $174 in March it recovered very quickly and even hit a new all time high in April.
Why do I like $AMT? Firstly, the stock chart looks beautiful (apart from March 2020). You probably think I'm taking the mick but I'm serious. Very rarely do you see a chart flow up like that without any major drawdowns. It reminds me of one of my other favourites, Microsoft.
The chart drew me in to learn more so what did I establish after looking at the financials?
Firstly there have been around 190 million shares purchased by funds in the last 6 months. This is always a good sign as it shows Wall Street likes this company.
When I look at the gross margin it's running at 70% which is great. I usually say over 40% is excellent so this eclipses my usual requirement.
Another great factor is there are no R&D costs!! They don't have to develop anything to grow, they just need towers to lease. SGA is consistent with growth and increasing in line with revenue.
Net earnings are running at 24% which is above my 20% threshold. Cash on hand is increasing in line with revenue and it looks like they are continuing to acquire other companies with goodwill running at over $6b. They have an incredible amount of assets with makes it a very high barrier of entry for any competitors. Current ratio is sitting at 1.1,
It missed earnings by $0.12 in Q1 2020, original target was $1.05, this has been revised with a target of $1.04 for Q2.
Analyst targets vary between $211 up to $315 with an average of $267. Current stock price is $227 (15/05/20). Looking at a weekly chart I think we are at a fairly solid support level but if it does dip lower we could see $220.
Overall my opinion is $AMT is a buy. Carriers need cell towers, the growth of cell towers by AMT in emerging markets is a positive for me, mobile phone use isn't going anywhere. They have a steady increase in revenue, strong fund investment, good financials all round. A little dip in the EPS in Q1 but nothing too drastic. Not to mention the ever increasing dividend!!
Let me know what you think of AMT in the comments below.
I currently hold positions in AMT. This is not advice to invest and purely my opinion of this company.
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