Out of all the popular investment choices available, Sprint Corp (NYSE:S) qualifies as one of the more volatile and unpredictable. This isn’t just a generic statement: From the beginning of 2014 to the end of 2015, Sprint stock lost 65% of market value. Interspersed in that two year period of agony were moments that S stock genuinely appeared to be making a comeback. Time and again, those promises ended up with further pain and misery.
Even to start off 2016, Sprint stock was no friend to those with heart problems or a general lack of patience. January of last year produced a loss of 14%, but that was the good news at the time.
At one point, S stock was in technical danger of falling below the $2-mark. Even if the fundamentals were positive — they’re iffy if we’re being generous — such a drastic erosion would scare even the most ardent supporters.
I’ve been on both sides of the fence with Sprint stock, as I’m sure many analysts have. S stock is not an investment where you can afford to take your eye off the ball. Every pitch is seemingly on a three-two count with two outs and the bases loaded. Sprint stock can instantly make you a hero, which I suppose is the charm of it all.
Having said all that, S turned out to be a big “W” in 2016. Speculators and those that had a gut feeling were proven correct, with Sprint stock producing triple-digit profitability. While it’s incredibly unlikely to pull that off a second time in a row, S can still perform bigly.
The Trend Is S Stock’s Friend
Broadly speaking, Sprint stock has been a choppy and unpredictable mess — even compared to the “Wild West” of telecommunication stocks like Verizon Communications Inc. (NYSE:VZ) and T-Mobile US Inc (NASDAQ:TMUS). That again is why traders love S — without volatility, it’s hard to make money on either side. But with a number of business decisions and strong tailwinds, it was hoped that Sprint stock would definitely lean bullishly.
Primarily, there was the DraftKings partnership. Last September, I wrote that “DraftKings will have another avenue by which to grow their ever-expanding business. For S stock, it only helps the mobile carrier’s long-term strategy. Fantasy sports participation has jumped exponentially year after year. Serving this key demographic is a no-brainer. In addition, women are increasingly involved in fantasy sports leagues, making for a surprisingly diverse consumer base.”
The efforts were also paying off where it matters most — subscriber growth. Last fall, in its first quater fiscal year 2017 earnings report, the mobile provider exceeded all expectations for its monthly subscription base. More recently in its Q2 report, S reported a gradual improvement in customer retention. So not only are people attracted to the company’s aggressive marketing strategy, they’re still in after the honeymoon phase.
Click to Enlarge
What this all translates to is a consistently bullish investment. June of 2016 was the last time that the market value for Sprint stock fell below its 200-day moving average.
In that same time period, S stock has dipped below its shorter-term 50-day moving average only once. Moreover, there’s little evidence of shares failing to follow its overall pattern of higher highs and higher lows.
Until Sprint stock shows evidence of tiring via a long, consolidation period, or volatility that drops it below its upward trend channel, I wouldn’t make too many drastic moves.
Sprint Stock Is Unafraid of the Trump Era
One point to note is that S has shown remarkable resilience in light of now President Donald Trump’s administration. In fact, Sprint stock is one of the beneficiaries of “The Donald” turned “The President.” A day after the election, shares jumped more than 13%. Since that fateful moment in American history, S shares are up a whopping 52%!
The same cannot be said about Sprint’s competitors. Verizon, for example, is actually down 8% for the year-to-date. The telecomm benchmark exchange-traded fund iShares US Telecommunications (NYSEARCA:IYZ) is only up 2%. Interestingly, Sprint stock is up 11.7%, and looks dramatically better than the mainstay competition.
Of course, it’s too early to tell just from these “January indicators.” Last year, many thought that S stock was going to be flushed down the toilet. Still, I think it’s encouraging that Sprint stock is doing well over these recent weeks. Donald Trump, no matter how you cut it, is a divisive figure. So for him to not negatively affect Sprint is saying something.
Ultimately, though, this is a company where the fundamentals are matching the technicals in a positive manner. Sure, there are a lot of risk areas for Sprint stock and within the industry. But management has been making aggressive moves, and the markets have rewarded their moxy. It’s turning out to be the era of the outsider, and S stock can make the most of it.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
