As “Mad Money” aficionados know, Jim Cramer is always on the hunt for bull markets. “And right now, there’s no denying that we’ve got a red-hot, raging bull going in the wireless business,” he said Wednesday on CNBC.
He’s taking his cue from Verizon Communications, which hit a new intraday high today, AT&T — just barely a dime off of its high — and Sprint Nextel, which has soared more than 30 percent over the past week on news of a significantly better-than-expected second quarter. Semiconductor company Cirrus Logic, which makes high-quality audio components for smartphones, also shot up after reporting strong numbers.
“We’re witnessing a gigantic worldwide explosion in mobile data usage,” Cramer said. “So, don’t forget about the companies that make all of this possible.” Like American Tower.
The Boston-based company is the leading owner and operator of wireless towers in North America, with more than 45,000 locations in the U.S., South America, India and Africa. Cramer said the business model behind owning wireless towers was one of the greatest he’s ever seen, especially now that wireless carriers are spending big money to upgrade their networks. And each time AMT constructs a new tower, the firm’s additional antennae allows it to collect rent from multiple tenants — meaning “massive incremental margins” for the company.
Such margins can be seen in the 39 percent return, including reinvested dividends, that AMT has given investors since February 2011, he said.
This morning, AMT reported that its rental and management business was up 11.4 percent, while its international revenues surged 31.4 percent — the first time in AMT’s history that its international side has generated more new business than its domestic side. “Looks like wireless is a truly secular trend that’s holding up just fine outside the U.S.,” Cramer said.
To find out more about the company’s latest quarter and future prospects, he checked in with Jim Taiclet, chairman and CEO of American Tower, on Wednesday’s program. Watch the video to see the full interview.
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