by Fred Fuld III
Without cell towers, your cellular phone would be worthless. It would be like cars without roads, ships without water.
Cell towers, also known as cellular base stations, media towers, or cell sites, are a critical factor in communication.
So the owners of cell towers have a significant and very important set of assets.
There are actually several different stocks that generate revenues from their portfolio of cell towers, most of which are structured as real estate investment trusts or REITs.
A REIT is structured as a trust which is required to distribute at least 90% of its income in order to avoid double taxation. Taxes would be avoided at the corporate level. The REIT invests in some type of real estate or diversified types of real estate.
These cell tower stocks have suffered over the last year, possibly getting close to buying opportunities.
American Tower (AMT) is the largest cell tower owner with approximately 43,000 towers, according to WirelessEstimator. It is structured as a REIT, with a trailing price to earnings ratio of 30.9 and a forward P/E ratio of 39.45. Earnings per share this year jumped by 49.5%. The stock pays a decent yield of 3.13%.
Revenues for the latest quarter have increased by 16.3% year over year, and quarterly earnings per share have grown by over 18% year over year. American Tower has dropped from about 295 at the beginning of the year to 185 now. It may be approaching a reasonable purchase price.
Crown Castle International (CCI) is another large player in the cellular tower industry. This REIT owns about 41,000 towers. The trailing P/E is 35.6 and the forward P/E is 32.53. Earnings grew by 13.50% this year, and the stock has a yield of 4.64%.
Another company in the tower arena is SBA Communications (SBAC), a REIT with roughly 17,000 towers. The P/E is fairly high at 77, and the forward PE is also on the high side at 54. Even though the yield is low at 1.15%, the earnings skyrockets this year by 906%.
Uniti Group (UNIT) is one of the smaller REITs with less than 1000 towers. The PE is 10 and the forward PE is 9. Earnings were up 113% this year, and the company provides a very high yield of 8.50%.
United States Cellular (USM) is the only company on this list that is not a REIT. The stock has 4,400 towers, a PE of 19 and a forward PE of 22. Unfortunately, earnings this year were down by 13.90%. It does not pay a dividend.
There are a couple ETFs with are participating in the cell tower industry, Pacer Benchmark Data & Infrastructure RE (SRVR) with a yield of 1.72%, and the Defiance 5G Next Gen Connectivity ETF (FIVG) yielding 2.38%.
Watch the price action of these stocks. Maybe if they drop to a bit more reasonable price, they may be calling you as a buy.
Disclosure: Author didn’t own any of the above at the time the article was written.