Shares of American Tower Corporation (NYSE: AMT) gave investors something to smile about over the long weekend after they popped 6% during trading in Friday’s session. They were one of the top performers out of all the large caps after Oppenheimer analyst Timothy Horan upgraded them and raised his price target. Real estate investment trusts (REITs) are typically only known for their high rates of return via dividends but rarely capital appreciation. Not so with AMT.
In pre-coronavirus trading sessions, they were up close to 800% over the prior decade, with a stock chart that looked more befitting a Silicon Valley unicorn. However, AMT’s core business is in multi-tenant communications real estate and if anything, demand has increased with the advent COVID-19. Horan slapped a fresh $270 target onto shares which feels kind of conservative when you consider that $270 is less than a 10% move away from where they closed on Friday. Credit Suisse boosted its rating for the stock at the end of last month and gave it a $308 price target which is a little meatier.
Outperforming Broader Market
Shares have already bounced 40% off March’s lows to fresh all-time highs, and while they’ve cooled a little over the past few weeks, Friday’s pop has them looking like they want to make a run for those levels again.
While the S&P 500 index has managed a spectacular bounce from the dark days of Q1, it’s still a long way off retaking all the lost territory and as of Friday’s close, was still down 9% for 2020. AMT meanwhile can boast of a 6% return so far which isn’t something for investors to shy at.
“Very strong emerging market demand”
In a note to clients, Horan wrote "AMT is benefiting from very strong emerging market demand, and India which has been a drag, appears set to accelerate growth as the industry has consolidated down to a reasonable level". He’d been taking a cautious approach up to now, unsure of what effect the T-Mobile - Sprint merger would have in the space. But with AMT’s adjusted funds from operations (AFFO) running at a juicy 3.7% while treasury rates are falling, now’s the time to strike. For context here, the US10YR note is currently offering around 0.661%, which is a big drop from the 1.919% it was printing at the end of last year.
The company reported their most recent earnings at the end of April which gave Wall Street a first look into how much (or little) the coronavirus pandemic affected the internal workings and momentum. The aforementioned AFFO was up more than 5% year on year, adjusted EBITDA was up 14% and total revenue was up 10%. Impressive growth for a $7 billion REIT to print after the sharpest economic slowdown in history.
Their CEO, Tom Bartlett, said with the release; “despite the challenges posed by the COVID-19 pandemic, we delivered a solid first quarter, including U.S. Organic Tenant Billings Growth of 5.6%, consistent international leasing activity and a 20% dividend increase. We believe that the resilience and stability of our business model, our investment-grade balance sheet, substantial liquidity and the secular global growth trends in mobile data usage will help us manage through the ongoing crisis.”
Pick of the Bunch
A dividend raise is one of the most bullish things a company can do and is a way for management to signal to shareholders that things are going well. They’re basically saying “here’s some additional cash for sticking around with us”. AMT’s dividend has an annualized growth rate of 22% over the past seven years and it looks like management has every intention of keeping that record going.
As economies continue to reopen and restrictions are scaled back, the great equity recovery continues. Investors could do worse than get involved with a stock that hit a new all-time high during the pandemic having hit multiple all-time highs before it as well.
6 Gambling Stocks Ready For a Rebound
If you didn’t believe that gambling stocks are a worthwhile investment, consider this. The Business Research Company projects the global gambling market to reach $565.4 billion through 2022. That assumes that the industry will continue growing at is annual rate of 5.9%.
The gambling industry is composed of many segments. There are casinos, lotteries, and the now legalized segment of sports betting. But gambling is also broken down into offline gambling, online gambling and even virtual reality gambling. In fact, virtual reality gambling is projected to grow at an annual rate of 21.5% until 2022.
But virtual reality is only one of a number of emerging technologies that are changing the “traditional” face of the gambling industry. There are now hybrid games – the combination of online and land-based games and even augmented reality games.
And don’t forget about fantasy sports. Fantasy sports has created an entire industry and it wasn’t created for one person to have bragging rights over their buddies. Fantasy sports is a multi-million industry.
But like many other segments of the economy, gambling stocks were hit hard by the Covid-19 pandemic. Not only were casinos closed, but live sports were also put on hold. This dried up many of the traditional avenues of gambling, and gambling stocks sank lower as a result.
However, the global economy is starting to re-open. And while it was thought that casinos would be one of the last to come back, there are casinos that are starting to re-open. And, it’s becoming more and more likely that there will be live sports (likely without fans initially) sooner rather than later. And that will open up the fantasy sports market.
These stocks tend to move quickly. So now is the time to take action. That’s why we’ve created this special presentation that highlights 6 gambling stocks that are ready for a rebound. The sell-off was real, but so will the comeback. And when it does, these stocks may cost much more than they do now.
View the "6 Gambling Stocks Ready For a Rebound".