🔥American Tower ($AMT); iShares Cohen Steers ($ICF)

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American Tower ($AMT) ◾ Wireless infrastructure REIT ◾ $98 billion market ◾ 1.99% div yield

Brief:

American Tower has crushed the S&P 500 by 445% over the past 10 years.

What they do:

They own, operate, and develop communications real estate like cell towers. Their customers include wireless service providers (AT&T, Verizon), radio and television companies, and government agencies.

How they make money:

Their revenue is generated from tenents leasing space on their towers.

High gross margins and low CAPEX: The marginal cost of adding new tenents is low (see picture below). This has resulted in gross margins averaging 70% for the past five years. Which rivals gross margins at some software companies.

In addition, sites require little to no annual CAPEX.

Churn: Historically, churn has averaged 1 to 2% per year.

Revenue is diversified globally: 51% U.S., 2% Asia, 9% EMEA (Europe, Middle East, & Africa), 17% Latin America.

Why we like this company:

This company allows you to participate in the “software is eating the world” trend without having to pick who the next wave of winners will be (i.e. who will be the next Facebook, Amazon, etc).

Financial highlights for FY 18’ 17’ & 16’ ($ in millions):

Revenue: $7,440.1; 6,663.9; 5,785.7

Revenue growth YoY: 11.6%; 15.2; 21.3

Gross margin: 70.7%; 69.1; 69.1

Net income margin: 16.6%; 18.6; 16.5

Free cash flow: $3,748.3; 2,925.6; 2,701.7

Return on equity: 17.0%; 15.3; 13.1

What’s their chart telling us?

The trend is higher. At these prices, we do not believe the risk/reward favors new positions. We would wait for a BIG DIP.

ETFs that include American Tower:

Pacer Data & Infrastructure Real Estate ($SRVR); Real Estate Select Sector SPDR ($XLRE); iShares Cohen & Steers REIT ($ICF) (See below).

Additional resources:

Investor presentations: Introduction to the tower industry; American Tower overview; U.S. Technology and 5G update. (All three presentations offer great information)

iShares Cohen Steers ($ICF) ◾ REIT ◾ $2.4 billion market cap ◾ 2.86% dividend yield

Since bottoming in 2009 at $23, this REIT has gained over 420%; outpacing the S&P 500 by ~70%.

This REIT is interesting... They don’t focus on a specific sector; they own REITs that dominate their respective categories.

Sector breakdown:

Specialized (data center & cell tower REITs): 28.52%

Residential: 19.35%

Retail: 15.79%

Office: 12.66%

Industrial: 10.24%

Healthcare: 9.71%

Hotel & Resort: 3.31%

Additional resources:

ETF home; Fact sheet; Prospectus.

Thanks for reading, and have a great day!

Caleb

Nothing in this post/podcast is to serve as investment advice. It’s for informational purposes only. Always do your own research🤨

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