01/07/2015 7:00 am EST
Our top speculative pick for 2015 is leading provider of satellite-based communication services, explains George Putnam, editor of The Turnaround Letter.
Traditionally, most of the business at Globalstar (GSAT) has consisted of satellite telephone and data services. However, the upside potential in going forward comes from the value of the spectrum that the company controls.
Globalstar is developing this spectrum to offer Wi-Fi through what it calls Terrestrial Low Power Service (or TLPS). As the traditional spectrum used for Wi-Fi becomes overcrowded in many areas, there could be a substantial market for TLPS, both in the US and globally.
The company is quite far along in the process for obtaining Federal Communication Commission approval for TLPS. Moreover, a number of large companies such as Amazon and Cisco have expressed interest in the TLPS product.
Globalstar recently announced a test of the service with another party that was not identified but appears to be a major technology company.
In October, a hedge fund that was short Globalstar stock launched a major press campaign disparaging the effectiveness of TLPS.
The company has effectively refuted all of the hedge fund’s arguments, but the stock has only recovered a fraction of the losses caused by the disparagement effort.
We believe this creates an attractive entry level into the stock. While investing in any new technology has risks, we believe that the upside potential in Globalstar’s new Wi-Fi technology more than outweighs the risks in this case.