American Tower: Don’t Worry, Be Happy

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Okay, Josh Cantrell didn’t say exactly “don’t worry, be happy” about American Tower’s stock price but the headline over his article in SeekingAlpha.com did read: “American Tower: Investor Worries Overdone.” On February 10, he said, “American Tower’s stock price has been punished of late and currently sits at a 52-week low. The market seems to be running from companies with high levels of debt and/or high P/E multiples. AMT has both.”

But Cantrell reasoned that AMT debt and high P/E “are attributable to aggressively measured growth initiatives around the globe, rather than irresponsible spending or mismanagement.” He also believes that medium- to long-term prospects “look very promising for AMT and growth story remains intact.”

Shares in the tower titan have taken a beating of late but he believes “the company is no worse fundamentally, than it was on December 1, 2015, when the share price closed the day at $101.17. My theory on the current market correction is that investors are scared of two things more than any others: 1) corporate debt and 2) a high P/E multiple.”

Cantrell argues American Tower, which owns 140,000 towers in 13 countries including 40,000 in the United States, “is actually in good shape financially and that the high debt and P/E ratio are a reflection of aggressive, but measured, growth initiatives in several emerging markets globally that have a solid chance of paying off handsomely over a 5- to 10-year time frame. The debt has been used to build the largest and highest qualify portfolio of tower assets of any operator in the world at a time of tremendous expansion of consumer data usage and, to me, is an example of effective and responsible use of debt.” He might be onto something. American Tower (Nasdaq: AMT) shares climbed on the on the Nasdaq $2.01 or 2.4 percent to close Friday at $85.67.

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