NII Holdings Has Been Boring but Will Take Off

| About: NII Holdings, (NIHD)
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I don't think I've talked much about NII Holdings (NASDAQ:NIHD) - this is basically Nextel's South American operations, catering mostly to business customers. From the NII homepage.

Company description: NII Holdings, Inc., formerly known as Nextel International [NII] is one of the world's leading providers of fully integrated wireless communication services designed to meet the needs of business customers in selected international markets. Principal operations are in major business centers and related transportation corridors of Argentina, Brazil, Mexico, Peru, and Chile.

Although NII is based in Reston, VA, we have an interesting international proxy for business in the Brazilian/Mexican markets. This is a stock I have been following for a few years. Typically its pattern has been to bore the (edited!) out of you for months, and then take off.

For example, last summer in the US market doldrums, it traded in the range of upper 40s to mid 50s for 3 months. Then a quick move to $70 in a month's time. Then sideways for Oct, Nov, Dec, Jan. Then from $65 to $90 from late January to mid-July.

Since mid-July, NII Holdings has essentially fallen from $90 to $70 before beginning to pick up the pieces. Yesterday for only the 2nd time in 2 months did it close above its 50 day moving average. The last time it tried this, it failed (around early September), so no guarantees, but it followed up Wednesday's move with a nice +3% move on Thursday.

That's the technical side - but I like this story, as with all holdings in the fund, due to its fundamentals. Earnings for 2007 are slated to be $2.20, jumping to $3.64 in 2008. That's a sizzling 65%, on revenue growth of $1 billion - or 31%. With that said, it has missed analysts' estimates by 4% the past few quarters each, but I think that is missing the forest for the trees with our obsession with 'beating ABC number" - the year over year growth is tremendous.

This puts the forward PE ratio of NII Holdings at 37x for 2007, but only 22x 2008. Compared to some of the rocket stocks and momentum names, this is downright cheap for this type of growth. Analysts are pegging the long term (5 year) growth at 40%. So the fundamentals look good, and the technicals could be shaping up correctly as well.

I am adding 100 shares to my existing 1.3% position and will continue to add if this strength continues and is not a false reading. This will move the holding up to roughly 2.05% of the fund's holdings. It still is 11% away from its all time highs of around $90, and this should be a stock that makes a run to par in the coming 1-2 quarters.

Disclosure: Long NII Holdings in fund; no personal position