More and more often, wireless providers are improving their data networks and introducing or enhancing 4G LTE services. With faster and more reliable networks, companies will be able to draw more customers, so this is one of the most important things to watch with wireless carriers. Recent news would seem to be fairly positive for AT&T (T), Verizon (VZ), and Sprint Nextel (S), but I do not expect these to affect the stocks as much as some others believe. In this article, I will investigate recent developments related to LTE and data networks. I think AT&T, Verizon, and Sprint are in good places, but AT&T and Verizon are fairly expensive at the moment. MetroPCS Communications (PCS) and Clearwire (CLWR), on the other hand, are not in such strong positions, regardless of price.
AT&T is currently trading around $35, and its 52-week range is $27.29 to $36.21. Its market cap is $208.37 billion, and its trailing P/E is 51.21.
AT&T has recently announced that it has added LTE services to seven new locations, meaning that it now offers LTE to 47 markets in the United States. These new areas include Buffalo, Burlington, Cleveland, Corpus Christi, Gainesville, Greensboro-Winston Salem, and Wichita. Its LTE services can now reach a total of nearly 80 million people, and it believes that it will finish building its 4G LTE network by the end of 2013. Verizon already offers LTE in 304 markets though, and it hopes to increase this to 400 markets by the end of the year. With this in mind, one can hardly be too impressed by AT&T's addition of seven new markets. It is good news, but this is certainly being overshadowed by AT&T's overall place in the LTE market.
Some are also noting that AT&T has added more LTE-capable devices to its line-up, like the Samsung Galaxy S3. While I agree that this is a good idea, AT&T is still playing catch-up, so I do not think this good news will bring that much success to the stock. Based on the news alone, I might consider this stock, as AT&T is growing. Considering the high price at the moment, however, I do not recommend investing in AT&T.
Verizon is currently trading around $45, and its 52-week range is $32.28 to $45.07. Its market cap is $127.11 billion, and its trailing P/E is 48.
While Verizon already has a major edge in the LTE market, it is continuing to expand and improve its services as well. It plans to expand its LTE network in Southwest Missouri on July 19, which shows that Verizon is only continuing to grow. It has also recently improved its coverage in upstate New York, activating LTE services in Syracuse, Cicero, Clay, Cortland, and Sullivan. Its massive-and quickly-growing-LTE services now reach two thirds of the United States, putting Verizon well ahead of its closest competitor, AT&T. Due to its high price, I do not recommend the stock, but Verizon is certainly a strong company that investors should consider when it gets cheaper.
Sprint is currently trading around $3, and its 52-week range is $2.10 to $5.52. Its market cap is $9.63 billion, and its revenue per share (trailing twelve months) was $11.38.
On July 15, Sprint will finally launch its first LTE networks in five U.S. cities, helping it compete more effectively with AT&T and Verizon. This should also help the company increase its sales of LTE devices like the LG Viper 4G LTE and the Samsung Galaxy S3. This is an absolutely necessary step for Sprint, as LTE networks are becoming more popular due to their better performance and speed.
Highlighting the comparison between 3G and 4G networks, RootMetrics recently conducted a study comparing several data networks in Boston. AT&T and Verizon had LTE networks in the area, and it is hardly surprising that these two companies led the field in the various measures of the networks. While T-Mobile did fairly well in the tests, it still had a download speed that was lower than the LTE networks. Verizon's average download speed was 12.2 Mbps, AT&T's was 9.6 Mbps, and T-Mobile's was 8.0 Mbps. Sprint did horribly in the various tests, receiving the worst overall performance score, and being one of the two least reliable carriers in the study. This highlights Sprint's need for LTE even more, however, so one should expect reasonable gains after its LTE introduction, even if it is nowhere near Verizon and AT&T. Due to this and its low price, I do recommend investing in Sprint.
MetroPCS is currently trading around $6, and its 52-week range is $5.53 to $17.39. Its market cap is $2.3 billion, and its trailing P/E is 8.68.
Despite its low price, I do not believe MetroPCS would make a good investment at the moment. In the RootMetrics study I have already mentioned, it was the fifth company under investigation. It barely outperformed Sprint, and it was the other carrier that was rather unreliable. Furthermore, it only managed a download speed of 1.5 Mbps. With this bad news, MetroPCS certainly appears weak and needs to do something major to turn things around. At the time being, I do not recommend investing in MetroPCS stock.
Clearwire is currently trading around $1, and its 52-week range is $1 to $3.78. Its market cap is $536.85 million, and its revenue per share (trailing twelve months) was $4.30.
There has been some positive talk about Clearwire lately, as TD-LTE may go "mainstream" and become a bigger part of the LTE network by 2016. As this is the network that Clearwire is pushing, this is great news to the company. Unfortunately, Clearwire does not plan to activate its TD-LTE cell sites until the middle of 2013, when it will turn on sites in 31 cities. By that time, however, some believe the company may have run out of cash, meaning this is a risky investment. Furthermore, although it may become popular, the struggling company may not be able to make it to 2016, even if it does last long enough to light up its TD-LTE sites. With these things in mind, I do not recommend this stock. I do not see any urgency in getting involved in it, as its low price is a sign of weakness rather than an opportunity. Be careful with this one.
Clearwire and MetroPCS are two stocks to avoid at the moment, even if Clearwire may warrant close monitoring as time moves on. AT&T and Verizon are experiencing good news, but they are too expensive at the moment. People should consider Verizon in the future, however, as it has the most strength in the LTE market. Sprint is cheap at the moment though, and it should be rising as it introduces LTE. Therefore, this is the stock that I recommend at the moment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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