Tower of Power
03/26/2009 1:03 pm EST
Louis Navellier, editor of Blue Chip Growth, finds a company that has managed to grow strongly, even in the face of the recession.
The market has shown considerable strength since the recent retest of the lows. But even after this rally, stocks are still extremely undervalued for many fundamentally superior companies.
That means many good companies are now so cheap that companies will continue to buy each other. These merger and expansion plans provide a psychological boost to the market, because it shows businesses are thinking about the future and not just trying to live another day in a difficult economy.
The trend also provides a big opportunity for us, because only fundamentally superior large-cap stocks can afford to pursue merger plans in this environment, so there's a good chance one of our companies could be involved in the next big deal and see its shares jump as a result. In fact, we've already seen some merger talk in relation to [companies on] our Buy List.
We will continue to focus on fundamentally strong companies that have remarkably low P/E ratios and are undervalued on the broader market. Undervalued stocks have many ways of delivering profits to investors like us.
American Tower Corporation (NYSE: AMT) is headquartered in Boston, but operates about 22,500 broadcast and communications towers in Brazil, Mexico, and the US. This stock is a perfect example of how we will capitalize on a weakening dollar by looking for stable large-cap stocks with an international footprint.
AMT rents space on towers and rooftops to wireless carriers, radio stations, and TV broadcasters. This is a growing industry that is recession-proof, and has a great outlook in both the long-term and near future.
Telecommunications infrastructure in America has gotten a boost from the Obama stimulus package, and emerging markets like Brazil and Mexico continue to see soaring demand for cell phones and other communications gadgets that use the airwaves. Make no mistake—the wireless business is still booming at home and abroad.
Here's the proof: Despite a brutal fourth quarter-earnings season for the rest of the market, American Tower reported operating earnings of $85.8 million or 20 cents per share, compared with a loss of $5.5 million or almost breakeven in the same quarter a year ago. During the past four quarters, the company's revenues have risen by 8%.
A strong US dollar and less favorable exchange rates is weighing on AMT right now, but I expect that to change in a hurry. The stock is a great bargain right now. (It closed below $32 Wednesday—Editor.)
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