Sprint Nextel (S) shares appreciated 6.47 percent last week, and 36.51 percent over the last month. See the one-month chart, below: (click to enlarge)
And though Sprint shares are now up over 40 percent since the start of the 2012, they are still down 36.61 percent over the last 12 months, which means that the company still has a long way to go until most longer-term investors are back to even. See the one-year chart, below: (click to enlarge)
A large portion of Sprint's recent strength and outperformance compared to the broader U.S. equity market is likely due to its general lack of European and Emerging Market exposure. Additionally, Sprint's move higher is fueled by its growing relations with Apple (AAPL). Earlier this month, Sprint announced that starting June 29, it will begin selling the iPhone through the Virgin Mobile USA branded prepaid service. This marks just the second U.S. pay-as-you-go carrier deal for Apple's iPhone, and a move that should at least marginally result in continues iPhone sales growth for both Apple and Sprint.
Sprint acquired Virgin Mobile USA in 2009, from billionaire Richard Branson's Virgin Group. Virgin's U.S. business was already running its on Sprint's network. Leap Wireless International (LEAP) also recently announced it will offer the phone on its network. Sprint started to sell the iPhone when Apple launched the 4S model, to start the fourth quarter of 2011. Sprint received the iPhone after Verizon (VZ), the largest U.S. mobile service provider, which got the iPhone in early 2011, and AT&T (T), which has had the iPhone from its beginning and still has the most iPhone users.
The prior lack of the iPhone was seriously contributing to attrition in Sprint's customer base. The company did report a turn-around in its subscriber losses due to strong iPhone sales. Sprint is also the only of the three main mobile operators to continue to sign unlimited data plans for iPhones, with AT&T and Verizon both trying to phase out unlimited data, and this may appeal to many data-heavy users that are not around wifi.
Sprint continues to offer unlimited plans, which makes their pricing model more compelling to high data users than those offered by the larger competitor. Still, it is possible that a qualitative difference will exist in the service offered, such as poorer reception or actual data speeds. As data usage per customer continues to increase, it is still unknown how well these networks will run.
Since Sprint has only had the iPhone from the start of Q4 of 2011, it has benefited from the addition for a short period of time. Additionally, Sprint has a good working relationship with Google (GOOG) and its Android OS, including being early adopters of Google Wallet and allowing for data only plans that integrate Google Voice. Sprint is likely to benefit from continued adoption of Android and Apple's iOS, and will continue to be one of few national partners for businesses that want to compete with AT&T and Verizon.
As last reported, Sprint had $2.53 in cash per share at the end of Q1 2012, with decent cash flow and the apparent ability to service its near-term debt obligations. This, coupled with its current tailwinds and lack of European exposure, should bode well for Sprint over the coming quarters. Nonetheless, Sprint had fallen below its cash on hand earlier this year, and it is possible that such will occur again in the future. Despite these risks, investors have been flocking to Sprint shares recently, as the domestic focused telecom appears to present both a value and a tech-oriented growth investment opportunity.
Still, from a technical standpoint, Sprint has been performing lately. Just last week, Sprint broke through its mid-term resistance of $3, which has plagued the company since the start of Q4 of 2011. See a technical performance chart: (click to enlarge)
Sprint's ease in breaking through this clear resistance point is a trend that could continue. In fact, on the way down, Sprint spent a fairly limited amount of time between three and four dollars per share, and it is possible that Sprint will spend a similarly brief period of time in that range on the way back up. See a two year performance chart: (click to enlarge)
Sprint appears poised to continue to benefit from more Apple related strength, and its general lack of exposure to European weakness. Given Sprint's accelerating strength into the end of this second quarter of 2012, it appears likely that Sprint should continue to gain into its Q2 earnings report. Sprint is scheduled to release its Q2 results on July 30, or in about five weeks. AT&T is scheduled to report its Q2 results on July 24, and Verizon is scheduled to report its Q2 results on July 19.
Disclosure: I am long S.