John Reese selects stocks based on a detailed historical analysis of the strategies of many of the s...
Top Picks 2018: Uniti Group (UNIT)
01/19/2018 5:00 am EST
Uniti Group (UNIT), previously known as Communications Sales & Leasing, still derives significant revenues from the April 2015 spin-off of assets from Windstream Wireless, observes Brad Thomas, editor of Forbes Real Estate Investor.
In May, Uunit Group passed the two-year anniversary of its spin-off into a publicly traded real estate investment trust.
As Uniti's CEO, Kenny Gunderman, explained on a recent earnings call, "after a quiet start to develop our strategy and funnel, we rapidly evolved the company over the last 15 months from primarily a single tenant, one property landlord to servicing nearly 15,000 customer connections through three diverse, but complementary business segments."
UNIT has invested over $1.5 billion in seven acquisitions to grow pro-forma adjusted EBITDA by $120 million or 18%.
Top-line revenue has grown 35% to over $950 million on a pro basis and Uniti has diversified revenues from non-Windstream customers from 2% to 30%.
Fiber is the mission critical infrastructure element that will fuel both wireless and wireline bandwidth growth. Demand for wireless bandwidth exceeds current supply. Uniti Group has evolved into a more diversified model with attractive return profiles across all asset classes.
In summary, Uniti Group provides investors with outsized risk, but for a higher risk investor, there is enhanced opportunity. We maintain a speculative buy rating as we believe that the company has the potential to return +30% in 2018. Disclosure: I am long UNIT.
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