In Focus This Week: another way to skin an apple, food riots again and the SITFA
Another Way to Play the New iPhone
The perfect buying storm, that’s what Jennifer Fritzsche of Wells Fargo called the business the new iPhone will generate for cell tower companies.
The three companies Barron’s featured were American Tower (NYSE: AMT), Crown Castle International (NYSE: CCI) and SBA Communications (Nasdaq: SBAC).
The new iPhone has finally embraced the newest technology for true broadband on a cell phone, LTE, long term evolution technology, 4G. It gives phone users lighting fast service but requires new upgrades on all cell towers.
American Tower CEO James Taiclet said the transformation to 4G is a decade-long process that is in its early stage. Only 25% of towers now have the equipment on them to run 4G phones.
Barron’s reported that the research firm IDC forecasts that U.S. LTE adoption could grow 87% a year through 2016, when it expects 121 million subscribers across the country.
When you look at it from that perspective, the cell tower business is looking very rich.
The likely winners according to Barron’s, American Towers and SBA. American Tower’s revenue is forecast to grow 16% this year, to $2.8 billion. SBA sales are projected to grow 30%, to $909 million.
Other industries Barron’s mentioned that look to benefit from 4G:
Chip manufacturers for networking equipment, Cavium (Nasdaq: CAVM). David Rudow of Thrivent Asset Management likes CVM and expects a jump in its stock as demand for its chips that hang on towers increases.
Rudow also likes Teradyne (NYSE: TER), which recently acquired LitePoint, which gives them direct exposure to testing equipment needed for every phone that rolls off the line.
Just a few more ways to skin an Apple.
Next Up, Food is Back in the Headlines
Lester Brown of the Earth Policy Institute said in a recent interview that millions of families worldwide plan for foodless days because they cannot afford food at the current inflated prices.
If you follow me here you know I have been talking about this coming crisis for the past four years.
The UN says food prices worldwide are approaching levels we haven’t seen since the food riots of 2008. The term “food unrest” will become part of our daily vocabulary.
Driving prices is the fact that more of the world is demanding grain-intensive foods, milk, meat and eggs, and energy production from corn now consumes one third of the U.S.’ corn crop, one third!
The upward mobility of the new middle class in the emerging markets is now the prime driver of food prices, not population growth.
Drought conditions in the Ukraine, the bread basket of Europe, the U.S. and Russia and no increase in rice production form Japan are all adding to this silent nightmare to come.
During a crop failure in the late 50s, 30 million Chinese died of starvation. This is a real crisis and it will drive food prices through the roof.
And Brown says that right now the world is doing everything it can to produce more food. He said, there isn’t much else we can do to increase production.
As I have been saying for two years, look at seeds (MON), fertilizer (POT, AGU, DD), food ETFs and food-producing companies. There is no food production without seeds and fertilizer.
As the demand pressure continues to build, prices have to go sky high for the whole food sector. As calloused as it may sound, you need to take advantage of this move.
Finally, the SITFA
It has to go to those folks in D.C. who cried foul when Jack Welch, the former CEO of GE, stated in no uncertain terms the unemployment numbers of the past week were rigged to make up for Obama’s horrible performance in the first debate.
His response to his critics in Washington, I wasn’t kidding, he said, these numbers are rigged. How can the unemployment number be dropping when we need 120 to 150,000 new jobs a month just to keep up with population growth? The September numbers didn’t even get that high? It was only 114,000.
Good question. How come we can’t get guys like this to run for president?
View original at: Investment U
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