With the federal government set to announce the largest telecommunications contract ever awarded within the next ten days, you know we have to find a way to profit from it. Cramer’s test is to find the company to which the contract matters most. We want the company whose stock should really go up if it gets the nod.
Let’s break it down real quick: Most likely, a $20 billion contract isn’t going to make or break AT&T and Verizon. They’re so gigantic they’d barely notice. The biggest gain Cramer sees if either one got the bid would be about 50 cents to 60 cents per share.
And that’s not to say AT&T hasn’t already enjoyed a 10% pop, but it’s doubtful it will see another. And Verizon is spending so much money these days on fiber – which is more important to the Street right now – that the $20 billion wouldn’t register.
Now it’s no doubt that the contract would be a big deal for Sprint-Nextel. But a recent strong quarter already sent the stock from $17 to $19, and Cramer doubts the company is so good that the price will continue to climb.