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Cellular tower stock
SBA Communications(SBAC - Get Report) owns a chunk of the mobile infrastructure spread throughout North and Central America. By leasing antenna space to wireless carriers, the firm has built a business that others dream of: It's chock full of recurring revenues, it's recession-resistant, and more capacity is very much in demand right now. But that hasn't kept shorts from hiking SBAC's short interest ratio up to 10.8.
SBAC gives carriers a way to increase the number of bars subscribers get without increasing their debt loads -- building a cellular network is capital-intense to say the least. But SBAC's growth has been staid and measured, keeping its balance sheet manageable as the firm expands in size.
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The biggest tailwind for SBA Communications right now is demand. The proliferation of smart phones has greatly increased the bandwidth needs of cellular operators, driving up the number of sites that SBAC can build and economically justify. Because the firm is the smallest tower operator of the big three, it's got ample room to stretch out its network footprint.
Financially, SBAC is in solid shape. Obviously, the cell tower business isn't cheap, and it's no surprise that this firm has financed its network primarily with debt. But the debt load is more than manageable, especially given the prolonged low interest rates that firms are enjoying right now. As SBAC continues to throw off cash (and buyback shares and pay down debt), the short case is going to be harder to keep going...