T-Mobile’s 5G rollout should help its stock price, too

The motley fool

In recent months, the telecoms sector has come under severe pressure. Investors seem to think the market is now saturated with smartphone and broadband subscriptions, leaving the remaining telecom giants to fight for a smaller pie. Recent aggressive promotions by US mobile operators have only amplified this fear.

Still, if there is a price war on market share, T-Mobile US appears well positioned to be one of the winners. With its acquisition of Sprint in 2020 and a few smart investments in spectrum, T-Mobile has a two-year lead in rolling out 5G. It has just completed the nationwide rollout of mid-band spectrum, covering 200 million people, which will provide T-Mobile customers with significantly higher speeds than 4G. Competitors Verizon and AT&T won’t be able to match it for at least two years, and even then T-Mobile believes it will have reached 300 million people with mid-range 5G by then.

Although the stock was recently down about 20% from its 52-week high, T-Mobile management remained confident in meeting its long-term goals, forecasting a sharp increase in cash flows. cash available in 2023 and beyond. The company also has a significant network advantage in rural markets and a promising partnership with Walmart, which can enroll new subscribers in 2,300 of its stores. Taken together, these factors make T-Mobile an attractive candidate for long-term portfolios. (The Motley Fool recommended T-Mobile US.)

Ask the fool

From CR to Ann Arbor, Michigan: An insider of a company I am invested in has sold tens of thousands of shares. Who buys them?

The madman replies: When company insiders, such as owners, executives, or directors, sell some of their stock, they often do so in the open market, where any investor can buy them. If there are many more stocks to sell than there are interested buyers, the price will drop until it reaches a point at which buyers will buy.

It’s reasonable to pay attention to buying and selling insiders for companies of interest, but don’t overdo it: remember that in many companies, the bigwigs get a lot of money. their compensation is in the form of stocks, so when they need or want money, it is common for them to sell some or more stocks. Some degree of insider selling is a routine and a non-event, but insider buying is usually a good sign, as it suggests that people with deep knowledge of the business expect the their stock value increases.

It’s worth finding out how much of their total shares a given insider has sold – you can look up this information on sites like FinViz.com/insidertrading.ashx.

From BV in Richmond, CA: What are derivatives?

The madman replies: These are complex financial contracts whose value is derived from other assets or benchmarks, such as stocks, bonds, interest rates, stock indices, mortgages or currencies. They are generally bought or sold by financial professionals to hedge risks or to access particular markets. Current derivatives include futures and options.

Derivatives can be very risky and inappropriate for less experienced investors, in part because many are unregulated. Warren Buffett called them “financial weapons of mass destruction”.

School of fools

Stocks can be classified in several ways, and different types of investors may prefer to focus on certain types of stocks. Here are some common types:

  • Value stocks are those that trade for less than their intrinsic value. They appeal to more conservative investors who demand a margin of safety. They often trade at relatively low prices because they are not popular with other investors.
  • Growth stocks are those of companies that are growing faster than average (based on metrics like income and profit). They are sought after by more aggressive investors willing to take more risk, buying stocks that may be overvalued.
  • Blue-chip stocks are those of large, respected and steadily growing companies, such as Bank of America, Coca-Cola, IBM, Johnson & Johnson, Nike, Procter & Gamble, and Walt Disney. They are generally considered to be safer than average.
  • Speculative stocks tend to be risky, but they offer a small chance of high returns. They include stocks quoted in cents, stocks of emerging industries or economies, and stocks of rare materials. Some biotechnology stocks may be speculative if their success depends on drugs in development that are not yet approved.
  • Income stocks pay dividends to shareholders, usually through quarterly cash payments. Favored by retirees and others looking for investment income, they may grow more slowly.
  • Cyclical stocks fluctuate with the economy. Automakers and cruise lines, for example, can see their business explode when the economy is growing and contract during a downturn when people tighten their purse strings.
  • Defensive stocks generally remain stable during economic volatility. Think about basic needs: groceries, soap, medicine, electricity, etc. Consumers will buy these items and services in good times and in bad times.

Some stocks can fit more than one of these descriptions – maybe it’s a defensive dividend-paying stock or a fast-growing value stock. It’s worth spending some time figuring out what type of investor you are and what types of stocks are best for you.

My dumbest investment

From MM, online: My partner and I got into residential rental real estate about ten years ago. We have purchased several properties at an annual tax auction, most of which have undergone proper due diligence. One ended up making a good profit when we sold it five years later; we’re pretty much breaking even, or at least expecting to break even, on the rest. Overall, our annual return on these properties was approximately 4%.

However, we bought a property out of the blue, only doing a little research online the day before the auction: county records, Google Earth and Street View, etc. We were green and feared that we would miss the opportunity. We won the auction at $ 21,000. When we walked past our new acquisition after exiting the auction, we discovered that a huge tree had fallen directly into the middle of the building, which was in imminent danger of collapsing. He didn’t need a new roof, it had to be demolished! We would have been better if it had been a wasteland. We sold it for a net loss of $ 16,000. We thank our lucky stars this lesson was so “cheap”, relatively speaking.

The madman replies: If you’re smart or lucky you can make a lot of money in real estate, but as you’ve learned it can be tricky. (Over long periods of time, the stock market has had much higher average annual returns than residential properties.)

Who am I?

My roots go back to 1847, when a 30-year-old German invented an improved electric telegraph and started a telegraph construction company in Berlin. In the 1850s, I built much of the Russian state’s telegraph network. I set up an employee profit-sharing plan in 1858 and retired in 1872. I laid several transatlantic cables in the 1870s, and entered IT in the 1950s. With recent market value At nearly $ 139 billion, I’m a tech giant serving clients in industry, infrastructure, transportation and healthcare. I employ around 300,000 people around the world and I raise around $ 70 billion a year. Who am I?

Can’t remember the question from last week? Find it here.

Trivia response from last week: Mcdonalds

Casey J. Nelson