I almost bought American Tower (AMT) for Jubak’s Picks on Friday. But the stock was hovering just below its 200-day average and I was afraid that a continuation of the euro debt crisis would push the stock below that support level. Instead of more crisis, however, Monday has brought a huge relief rally based on a $1 trillion rescue plan worked out by European Union leaders over the weekend. So I missed what I believe is the local bottom on Friday, but on Monday, with Friday’s risk reduced, the stock is still a great buy, in my opinion.
 American Tower is in the business of building towers and then renting space on that tower to wireless companies. The profitability of a tower depends on how many sites on a tower American Tower can rent. With the current explosion in wireless data and broadband service, wireless companies need more tower space.
 Add that to new companies such as MetroPCS and Clearwire building out new networks and demand for space on American Tower’s 27,256 towers is booming. (American Tower’s competitors include Crown Castle (CCI) and SBA Communications (SBAC). I prefer American Tower because I think its finances are stronger.
 About 80% of the company’s revenue come from the United States and Canada, which makes the company play on the relative outperformance of the U.S. economy (in comparison to other developed country economies).
 Investors get an extra growth boost with American Tower from its presence in the fast growing wireless markets of Brazil, India, and Mexico. As of the end of 2009 about 6,400 of the company’s towers were in those three markets. Standard & Poor’s estimates that earnings per share will grow to 94 cents in 2010 from 59 cents a share in 2009. All this makes this a good fit for the growth stock strategy I outlined in my posts https://jubakpicks.com/2010/04/20/go-for-the-growth-and-where-to-find-it-at-a-reasonable-price/ . As of May 10, I’m adding the stock to Jubak’s Picks with a target price of $56 a share by April 2011.
Full disclosure: I will buy shares of American Tower three days after this is posted.
Jim: You were going to post a follow up to RIG after its announcement…looking forward to it.
OB
Jim, AMT looks good, esp. with its emerging market exposure, but I wouldn’t chase it here – looks like a test of support at $36-$38 is likely here as the market continues to melt down. OTH, fundamentals indicate a pricey stock, so if global growth slows, as appears likely, AMT may retest support at around $25 soon enough.
Jim, with the current market conditions, it feels a little bit of uncertainty in the market.
My impulse is to keep some cash on the side. but i note that it is refreshing to see that you still recommend to add some purchases to the portfolio. So do you feel confident that the worst is over now or maybe we should wait to see the impact of inflation in china or the drop back in Euro against the dollar??
what you think
AMT is a good company which was on my watch list last summer. September hit and the stock got away from me. I like the long term pick (and own the stock through a mutual fund), but I never did pick it up as an individual stock, and I agree with Ed here — the price is more than I’m willing to pay for the returns right now, when other stocks give the same returns for less. Good luck!
Speaking of Cramer I like to track which stocks Cramer has in his charitable trust that Jim Jubak also has in the portfolio, here’s the list as of right now….
CMI,INTC,TEVA,CSCO,JCI,MCD
Just knew it could last more then one day, what a fucked up market…
China’s April Inflation Accelerates, Lending Surges (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0cJCm6tlqVg&pos=1
I owned AMT because landline telephone will be out and wireless for smart cell phone is keeping grow very fast. AMT is the best tower company in global market.
BSDGV: I agree. I am thinking cash sounds good until the dust settles. Several days ago Trichet was not going to purchase bonds and today they are. Sounds desperate to me. 200bil of the money comes from the IMF – which is partially funded by the USA. Thank you very much for that. Apparently, they promised a ton of money. Enough to bail out Greece, Spain, Portugal for 3 yr committment. And their countries populus will be happier about saving others profligate ways of life because? This is going to be political. All this so that the wolves don’t swallow these countries. What would be so bad with them getting bit? Reality bites.
What a coincidence! The other Jim – Jim Cramer (the crazy one) just recommended this on Mad Money!
Just watched Cramer interview the ceo of AMT. mentioned possibilty of it becoming a REIT. Wondering on Jim’s thoughts on this. Would make a difference on placing it in a taxable or ira account. Would suggest waiting on the cramer sheep bringing it higher tomorrow and buy in the coming days.
bsdgv
The answer to the trick question is…Greece.
😉
What a day!
@ bsdgv
Jim has been telling us that, for the moment at least, the best place to invest $$$ is USA stock market. Guess where Europeans are investing money from now on.
AMT is on S&P Strong Buy (5-star) list with a 12-month target price of $57. I remember AMT is also a wind tower play.
I still am not sure this is the right time to buy any stock at all… FXE (Euro ETF) gave back almost all of its daily gain. So, people really don’t take this EU bailout thingy too seriously. Things feel so shaky I won’t be surprised if I wake up tomorrow to another market earthquake. Sorry to be so pessimist…
There’s a double top at $45, an ROI of 3%, and a forward P/E of 37? That doesn’t inspire confidence. Nice moat though.
Jim, thank you as always for your excellent analyses and transparency. On this one, you’re looking to pay 50x earnings for a company projected to grow by 20% in 2011? Granted, it does look better than CCI and SBAC, which are both projected to lose money in 2010. But my value leanings don’t go for hoping someone else will pay an even more expensive price than I paid. I’m sticking with INTC/ASML/ONNN.
This IS on my watch list!