American Tower is a Safe Way to Dial Up 5G

11/13/2019 5:00 am EST

Focus: REITS

Eddy Elfenbein

Editor, Growth Stock Advisor

5G is shorthand for the fifth generation of technology. 5G is superior to 4G in a few important respects. One is that it’s faster—much faster, explains Eddy Elfenbein, editor of Growth Stock Weekly.

That means more users can move more data, and that shortens download speeds. The technology is also more responsive. Thirdly, the technology allows you to connect more devices.

That leads me to how to invest in 5G. One of the best ways is by investing in those critical to 5G infrastructure. That’s is why I like American Tower (AMT) — a real estate investment trust that’s in the cellphone tower business.

Tower companies lease the space on their structures to several tenants like wireless carriers and government agencies. The move toward 5G will require dramatically denser networks, which means more demand for cell towers and massive deployments of smaller cell solutions.

American Tower currently has over 171,000 tower sites, but what I like is the economics of this business. Investors need to understand that towers have significant operating leverage. Adding tenants to existing towers adds more revenue while adding little incremental costs.

Another big plus I see for American Tower is its vast overseas footprint. This is important because the U.S. doesn’t lead in 5G technologies. While we were investing in social media, other countries have been investing in 5G.

I’ll give you an example. American Tower has its largest international exposure in India, where data usage has been growing by 100% per year, and carriers have been substantially increasing spending to improve networks.

Recently, American Tower impressed Wall Street with another strong earnings report. American Tower is a conservative way for investors to profit from the 5G Revolution.

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