GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

More "Valuation is for Sissies": American Tower (AMT)

June 11, 2010 | About:
As I wrote earlier in the week I am trying to build a wing of the portfolio for companies with insane valuations that people just buy hand over fist on every rally because... well, they go up. Another name I looked closely at was American Tower (AMT) - this is a hedge fund favorite. Simplebusiness description - all the towers needed for mobile communication.

American Tower Corporation, through its subsidiaries, operates as a wireless and broadcast communications infrastructure company. It develops, owns, and operates communications sites. The company operates in two segments, Rental and Management, and Network DevelopmentServices. The Rental and Management segment leases space on its wireless communications towers to customers, including personal communications services, cellular, specialized mobile radio, WiMAX, paging, and fixed microwave. The Network Development Services segment provides tower-related services, such as site acquisition, zoning and permitting services, and structural analysis services. As of March 1, 2010, the company owned and operated approximately 27,000 communications sites in the United States, Mexico, Brazil, and India.

Rather than just buying as the chart turned positive when the stock broke over all key resistance areas late last week I made the mistake of checking out its EPS estimates. The stock was around $42 ... in return I get $0.87 EPS for 2010, aka a forward PE of just under 50 for acompanymag-glass_10x10.gif growing about 20%. Not a 1 PEG (PE to Growth ratio), and not a 2 PEG, but a cool 2.5...

But who cares? The stock goes up... and that's all that seems to matter to the computers. I suppose if you are paying 50x forward, there is no shame in paying 80x and then 150x. This is 1999 logic. A missed opportunity as the stock has gone off to the races today.

amt.png

No position

Trader Mark

http://www.fundmymutualfund.com/
[i][/i]

About the author:

Trader Mark
Ockham Research is an independent equity research provider based in Atlanta, Georgia. Security analysis at Ockham Research is based upon the principle known as Ockham's Razor, named for the 14th-century Franciscan friar, William of Ockham. We utilize this straightforward approach to value over 5500 securities, with key emphasis given to the study of individual securities' price-to-sales, price-to-cash earnings and other historical valuation ranges. Please visit www.ockhamresearch.com for more information.

Visit Trader Mark's Website


Rating: 2.0/5 (3 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide