pitch me a tmt stock that isnt overvalued
what is a tmt stock that is not massively overvalued due to ai share price surge cough cough pltsr
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sorry meant to type palantir (pltr)
I mean, except the first T, the remaining M (Media) and T (Telecom) stocks are still not overvalued, hell, some telecoms are trading at such cheap valuations that it's hard for them to not double.
like?
many or even most media and telecom names trade at single digit EV/EBIT, whether that makes them cheap is another question because most of them are shitty businesses
LBTYA for example, cannibal buybacks, every year they come out and say they are buying 10% of the company back, they do it, and the stock doesn't react, the FY25 numbers after buyback, if you've followed the company for long enough, is ~$4.5-$4.8 of DFCF/share, and the stock price is $16/share; At a 10x multiple the stock is an easy double, the only reason it hasn't gone back to those levels is 1) Market doesn't care about it enough; 2) Market expects FCF to fall off a cliff, which is unlikely if you know what's happening.
This is kinda like DDS stock during the pandemic, no one cared until everyone did, and that was a 10x-15x depending on your starting point. LBTYA doesn't have the margin of safety of CHTR, but still is skewed toward reward when the risk is laid down.
Most of these companies are shit, whether they have incompetent management or it's just how the industry economics work. Massive CAPEX requirements with high debt-to-asset ratios in a high-interest rate environment? Yeah no thanks.
Plus still paying out monster dividends despite being comically overlevered to buy spectrum lol
Almost the entire telecom sector is distressed or soon to be
Pinterest
Who tf pays for pinterest…shit company
Maybe in like 2017…
PAYX, UI, PRGS
Good amount of short opportunities driven by the recent AI surges. Definitely some companies like that are fake and not going to be AI leaders in their respective space. I’d imagine about half of the current “AI” companies will end up outsourcing/partnering with the real players for each application vertical.
What about long
AT&T
Alibaba & Telefonica
planet labs (NYSE:PL)
Crowded trade but cable (CHTR) still looks interesting - I know this trade has been kicked around forever but the combination of favourable geographies (rural - they are sometimes the only service provider in a given area), along with MVNO strategy focused on sub growth over ARPU (~$37 vs median of ~$49) will be successful in a environment where consumer discretionary spend declines while having a reputable name on the product. Video continue to attrite but their will be an incremental increase in APRU as consumers cut the cord around pricing leaving high APRU customers. CHTR holds a video leadership position in strong geographies (>70% mkt. share) that have faster growing populations the the US national avg. like LA, Dallas, Houston. Cable sub losses in '22 where overstated as AT&T/VZ convert their subs to fiber connections, while regional cable players ATUS/CABO are reliant on high ARPUs to stay afloat which will push customers out the door due to pricing not speed - growth was pulled forward during covid. Competitor cable turnover in CHTR's geographies remains elevated 1.2% vs 0.4% avg. gives CHTR incremental opportunities to take mkt. share.
RDOF makes incremental investment opportunities look more interesting - it was kind of funny they sold off in December because of an announcement of additional growth capex spend - in any other business that is not cable it would be seen as a positive that their remains incremental growth opportunities in the business. Payback economics around rural build look like 4.7 year payback - if you think about cable as a infrastructure asset given WFH and competitors build will not economical without RDOF support you can be comfortable with the current growth capex economics.
If the market hammers the name the buyback economics will look continue to improve from a current ~7% year. Debt remains termed out nicely and trade at prices as low as ~70c on the dollar due to favourable yields with an avg. debt duration at ~13 years with a 3.2% avg. cost of debt (post-tax). Looking at a ~11% UFCF yield by 'H2 24 if the stock holds where it is with the current buyback strategy.
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