Stocks To Buy And Watch: American Tower In Buy Range After Recent Breakout

Wednesday’s IBD 50 Stocks To Watch pick — American Tower (AMT) — is one of the top stocks to buy and watch. AMT stock is in buy range after a recent breakout.


Stocks To Buy And Watch: American Tower

Boston-based American Tower owns cellular towers used by wireless service providers and TV and radio broadcast companies. According to the company, American Tower’s “global portfolio includes approximately 222,000 communications sites, including more than 43,000 properties in the United States and approximately 179,000 properties internationally. “

AT&T (T), Verizon Communications (VZ) and T-Mobile U.S. (TMUS) are among the biggest U.S. customers of American Tower.

In the second quarter, American Tower reported funds from operations per share rose 7% to $2.59, and sales climbed 16% to $2.67 billion vs. the year-ago period. The earnings report on July 28 sent shares up more than 4%.

“We also believe that by leveraging our core capabilities developed here in the United States, we could position American Tower as a premier global provider of communications real estate and a prime beneficiary of these trends,” said CEO Tom Bartlett on the earnings call.

He continued, “Further, given the relative lack of fixed line infrastructure, accelerating population growth and earlier stages of network technology evolution in many parts of the world, we believe we could both augment and extend our overall consolidated growth trajectory.”

IBD Stock Ratings

AMT stock shows a solid 92 out of 99 Earnings Per Share Rating, despite EPS gains in the single digits the past three quarters. Its Earnings Stability Rating reflects steady growth, however.

American Tower also has an exemplary SMR grade of A, according to IBD Stock Checkup. The SMR Rating analyzes a company’s sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).

In 2021, pretax margins and return on equity measured 30% and 56%, respectively. Meanwhile, sales growth averaged 16% over the last three quarters.

The stock has a strong 95 out of 99 IBD Composite Rating, ranking among the top stocks within the property REIT industry group. Other top REIT stocks include Extra Space Storage (EXR). Its shares are building a big double bottom that has a 222.46 buy point.

It’s impressive that AMT stock is trading in a new buy area even though its group remains about 17% off a 52-week high. American Tower is clearly a leader in the industry.

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Following a July 29 breakout, American Tower shares wavered but are rebounding. The stock is in buy range past a cup-with-handle’s 271.19 buy point, according to IBD MarketSmith pattern recognition. The 5% buy zone tops out at 284.75, so the stock is squarely in buy range. A six-day win streak was in jeopardy at midday Wednesday as shares erased gains.

In recent weeks, the stock found solid support at its key 50-day moving average line and decisively regained its long-term 200-day line.

A key technical factor to watch is the stock’s relative strength line. Amid a recent rebound, the RS line is approaching new highs, which is a bullish signal. The RS line should hit a new high on the breakout day or shortly thereafter to confirm the stock as a market leader. 

Following its July breakout, American Tower is one of the top stocks to buy and watch in today’s market. 

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.


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