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United States Cellular (USM) Hits 52-Week High on Solid View

A bullish outlook, with continued growth impetus and core focus, perhaps boosted investors' confidence and catapulted United States Cellular's (USM) share price to a new 52-week high.

Shares of United States Cellular Corporation USM scaled a new 52-week high of $57.45 during yesterday’s trading session, before closing a tad lower at $56.28, for a solid one-year return of 50.8%. This Zacks Rank #1 (Strong Buy) stock has the potential for further price appreciation and looks poised to touch new highs in the remainder of 2018 on the back of healthy growth dynamics.

Growth Drivers

United States Cellular is determined to offer the best wireless experience to its customers by providing innovative devices, coupled with superior quality network and national coverage. Notably, to increase smartphone penetration, the company has initiated Shared Data plans for consumers and businesses, at minimal charges. United States Cellular is also focused on expanding its solutions for business and government customers, including a growing suite of machine-to-machine solutions across different categories. The company plans to continue enhancing its advanced wireless services and connected solutions to better cater to the consumer, business and government customers.

In addition, United States Cellular has partnered with Internet of Things America LLC or IoT America to provide an advanced suite of IoT solutions for enterprise customers and rural communities across the nation. Together, the companies will provide smart farming solutions for farmers and ranchers to deliver high yields while enhancing daily operations. This, in turn, will bridge the infrastructure gap by providing connectivity to Americans who earn their living in rural areas.

Moreover, United States Cellular has successfully completed its 4G LTE network roll-out. This network carries about 88% of the company’s data traffic and reaches 99% of its postpaid customers, providing an exceptional network experience in the suburban and rural markets. The company has initiated testing of voice over LTE or VoLTE and plans for commercial deployment early next year. Additionally, multiple 4G LTE roaming agreements have been duly signed. We, thus, expect the company to benefit from its LTE expansion, as well as implementation of the VoLTE services.

United States Cellular is bullish about the rising demand for smartphones, which enjoy significant market penetration, supporting growth in data revenues. The company raised its earlier guidance on healthy growth dynamics and expects total operating revenues in the band of $3,950-$4,000 million, up from the previous range of $3,925-$4,025 million. Adjusted EBITDA is projected in the range of $925-$1,000 million, up from $850-$950 million estimated earlier. The company anticipates adjusted OIBDA of $760-$810 million, up from the prior guidance of $700-$800 million. This reflects the company’s expectation for modest customer growth, additional demand for data and continued migration through equipment installment plans, along with a very competitive pricing environment. Notably, equipment sales will likely continue growing as the take rate for equipment installment plans increases.

Earnings estimates of the company have increased by a stellar 500% in the past year to $1.62 per share at present. Such a bullish outlook, with continued growth impetus and core focus, perhaps boosted investors’ confidence and catapulted share prices to a new 52-week high.

Other Stocks to Consider

Some other top-ranked stocks in the industry are ATN International, Inc. ATNI sporting a Zacks Rank #1, and Sprint Corporation S and Telenav, Inc. TNAV, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ATN International has trumped earnings estimates thrice in the preceding four quarters, the average positive surprise being 138.1%.        

Sprint has a long-term earnings growth expectation of 19.6%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 320.8%.

Telenav has outpaced earnings estimates in each of the last four quarters, the average positive surprise being 12%.

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