It’s nice to be a company whose business is growing. Some companies do well when they produce a product or service that people want or need, but then run into trouble when it became outdated or consumers change their tastes or buying priorities.
However, in this era where smartphones and other wireless devices are as much a part of people’s outfits as shoes and wallets, companies that provide the network infrastructure to make those gadgets work probably aren’t going to see their demand drop anytime soon. As such, Crown Castle International (NYSE:CCI) is a company that is enjoying its demand for its business now and looks like it will be doing the same, well into the future.
Crown Castle owns, operates and leases towers and other infrastructure for wireless communications. The company offers coverage in more than 90% of the top U.S. markets and almost all of Australia. Not a bad business to be in these days!
CCI announced earnings last month, and it is evident the company is positioning itself as the wireless infrastructure leader in the United States. Total revenue for the fourth quarter of 2011 increased by 5% over the same period in 2010. The company also announced an agreement to acquire NextG Networks, which is the largest provider of distributed antenna systems in the United States.
Technically, the stock has been on a bullish trend since the end of November 2011. In recent weeks, CCI was basically basing and trading sideways until the stock finally broke out to the upside this past Wednesday. The stock just recently set its all-time high and has not looked back since.
With CCI trading here at $51.34, you can buy the CCI April 50 Calls for $2.80 or less.
The trade can profit if the stock rises and the call premium increases to an amount more than you pay. Maximum profit is unlimited because CCI can continue to rise, and the maximum loss is $2.80 if CCI finishes below the $50 strike at April options expiration. Breakeven is $52.80 at expiration ($50 strike + $2.80 option price).
CCI may pull back a bit before it marches higher, but unless we get an extremely bearish market in the meantime, there shouldn’t be anything technically or fundamentally standing in its way from going higher.