With the second quarter underway, and earnings right around the corner, many of the top firms that we cover on Wall Street are ranking and rerating companies in their coverage universe. With inflation a real concern going forward, and the market expecting at least two more interest rate hikes, it makes sense to own stocks that should do well under those conditions.
One sector that should perform well is the broader communications arena, that includes the tower companies, cable, satellite and the telecoms. The analysts at J.P. Morgan ranked their coverage universe for April, and we focused on the five of the top ranked stocks, some of which pay solid dividends. All are rated Overweight.
This is the top play for this month at JPMorgan. SBA Communications (NASDAQ: SBAC) is the third largest U.S. wireless tower company, with approximately 25,000 towers spread across the United States, Canada and Latin America. The core business for SBA is leasing antenna space on its towers to various wireless service providers on a long-term basis.
The company also manages rooftop and tower sites for property owners under various contractual arrangements, and it has a large site development and construction division. JPMorgan sees the stock as cheap relative to its peers, and it doesn’t feel that increased AT&T spending for 2018 is factored in to current estimates.
The JPMorgan price target for the stock is $130, and the Wall Street consensus target is $130.47. The stock closed Monday at $119.55 a share.
This is the largest of the rural local exchange carriers and is expected to continue get a large dose of government money to provide continuing internet service in rural areas. CenturyLink Inc. (NYSE: CTL) is a global communications, hosting, cloud and IT services company enabling millions of customers to transform their businesses through innovative technology solutions.
CenturyLink offers network and data systems management, Big Data analytics and IT consulting, and it operates more than 55 data centers in North America, Europe and Asia. The company provides broadband, voice, video, data and managed services over a robust 250,000-route-mile U.S. fiber network and a 300,000-route-mile international transport network.
The company announced last year plans to sell its data centers and colocation business to a consortium led by BC Partners for $2.3 billion, which it will use in part to fund its planned tie-up with Level 3 Communications. JPMorgan feels the dividend is safe, and the stock is undervalued compared to its peers.
CenturyLink investors receive a gigantic 9.15 % dividend. JPMorgan has a $38 price target, while the consensus price objective is at $27.15. The shares closed trading on Monday at $23.60.