Interested in the expanding industry of wireless communications? For ideas on how to search for wireless stocks, here's a list you may find interesting.
We screened the wireless communications industry for stocks that appear undervalued relative to their cash flows, indicated by high ratios of levered free cash flow/enterprise value.
Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm's value from all ownership sources: market cap, outstanding debt, and preferred shares. Companies with high ratios of levered free cash flow/enterprise value may be undervalued by the market.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.
Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.
List sorted by LFCF/EV.
1. USA Mobility, Inc. (USMO): Provides wireless communications solutions to the healthcare, government, enterprise, and emergency response sectors in the United States. Levered free cash flow at $51.33M vs. enterprise value at $316.60M (implies a LFCF/EV ratio at 16.21%).
2. Telular Corp. (NASDAQ:WRLS): Designs, develops, and distributes products and services that utilize wireless networks to provide data and voice connectivity among people and machines primarily in the United States and internationally. Levered free cash flow at $12.33M vs. enterprise value at $117.76M (implies a LFCF/EV ratio at 10.47%).
3. Cellcom Israel Ltd. (NYSE:CEL): Provides cellular communications services in Israel. Levered free cash flow at $290.26M vs. enterprise value at $2.80B (implies a LFCF/EV ratio at 10.37%).
4. NTT DOCOMO, Inc. (NYSE:DCM): Provides wireless telecommunications services, packet communications services, and satellite mobile communications services in Japan. Levered free cash flow at $7.03B vs. enterprise value at $68.55B (implies a LFCF/EV ratio at 10.26%).
5. TIM Participacoes S.A. (NYSE:TSU): Provides mobile telecommunications services through global system mobile technology to business and individual customers in Brazil. Levered free cash flow at $1.34B vs. enterprise value at $13.18B (implies a LFCF/EV ratio at 10.17%).
*LFCF/EV data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.