This column was originally published on RealMoney on Jan. 8 at 8:43 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

We haven't had a stock with the virtuous circle going for it in a long time. Don't know what that is? It happens when a stock goes higher; as it goes higher, it solves a lot of the balance sheet problems that would otherwise haunt it.

That stock is Level 3(LVLT Quote).

I know I have repeated myself often about Level 3. I think I have to, though. The stock is not well-liked, not because of its products or strategy -- I don't know anyone who thinks that ultimately a company that has spare bandwidth and programs to manage the onslaught of online video is a bad buy. Especially when it is run by a seasoned survivor of the telco wars, Jim Crowe.

Why is it so unloved? Simple: The balance sheet is just awful.

How can you cure a balance sheet? Simple: You get the stock higher so the company can issue equity to cure the bad balance sheet. I think that could be the way that Level 3 gets out of the very real jam that could occur as the company's debt schedule matures.

Even without it, as the business does better -- and it seems to be on that way, witness the JP Morgan number bump this morning on the closing of the Broadwing(BWNG Quote) deal -- watch the bonds. If you own the bonds, you could easily see that this company's free cash flow is going very positive. That gives Level 3 a chance to refinance with a lower coupon, especially when you consider that rates are very low, much lower than when management loaded up the boat with debt.

< Previous
1 2
Your Recent Quotes: Quote Up0 | Quote Down0
 
Dow S&P 500 NASDAQ
Oil*
65.43
8,280.74
896.42
1,796.52
10 Yr
3.50%
223.32
26.91
49.20
-2.63%
-2.91%
-2.67%
Data delayed 20 min
Get Jim Cramer's Free Newsletter

The Daily Booyah!
Get your daily dose of Cramer in your inbox.
Submit
We respect your privacy.

Premium Stock Ideas
Access Action Alerts Plus to find out Cramer's latest picks now!

Brokerage Partners