Back in August 2014, I decided to have some fun recommending three single-letter stocks I thought were great investments. Included among the 23 options was Sprint Corp (NYSE:S), which was trading around $7.37, slightly lower than where it is today.
Not every stock I recommend is going to do well over the long haul. My three picks failed to rise to the occasion. I might as well have gone with Sprint stock because the results wouldn’t have been nearly as bad.
Stock Performance – August 4, 2014, to May 25, 2017
| Stock | Total Return |
| Kellogg Company (NYSE:K) | 17.1% |
| Ford Motor Company (NYSE:F) | -36.2% |
| Loews Corporation (NYSE:L) | 10.6% |
| Sprint | 13.0% |
| SPDR S&P 500 ETF Trust (NYSEARCA:SPY) | 24.7% |
The Moral of the Story Is?
Don’t invest in single-letter stocks. Seriously, though, how could none of those stocks, including Sprint, not keep pace with the index? Passive investors need not answer my rhetorical question.
After three years there still are no companies trading under the letters J and U while the W is now taken by Wayfair Inc (NYSE:W) and the N, formerly held by NetSuite, disappeared last November when Oracle Corporation (NYSE:ORCL) acquired the company for $9.3 billion.
Using five different metrics, I’m going to rank Sprint stock compared to the other 22 single-letter stocks. To get a thumbs up, it will have to rank in the top 10 in at least three out of the five categories. The lower the score, the better.
Single-Letter Stocks: Sprint vs the Rest
| Metric | Rank |
| Stock Performance – 1 Year | 1/23 |
| Forward P/E | 20/23 |
| Current Ratio | 12/23 |
| Return on Assets | 18/23 |
| Analyst Recommendation | 17/23 |
Source: Finviz.com
Not Empirically Sound I’ll Grant You
Okay, this isn’t going to win many, if any, analysis arguments at the annual CFA testing, but I’m merely trying to point out that there are many ways investors can examine a particular group of stocks — in this case, single-letter stocks, a small fraternity indeed.
On a more serious note, I argued in February that S stock would best merge with Charter Communications, Inc. (NASDAQ:CHTR) in a merger of equals. However, the wireless alliance announced in early May between Charter and Comcast Corporation (NASDAQ:CMCSA) prohibits either company from making a major wireless acquisition in the next year without the other’s participation. So, my theory goes out the window.
InvestorPlace Writer Tom Taulli recently provided readers with three good reasons Sprint stock and T-Mobile US Inc (NASDAQ:TMUS) will ultimately tie the knot after some seriously tough negotiations. Frankly, I don’t see how they don’t come together.
Bottom Line Sprint Stock
As single-letter stocks go, S stock is a dud. That said, despite $36 billion in debt, the company’s sale in 2017 seems almost predestined.
However, instead of buying Sprint stock, I would do as InvestorPlace Contributor Lawrence Meyers suggested on May 19 and buy Softbank Group Corp (OTCMKTS:SFTBF) instead. You get most of the upside with not nearly as much downside.
Softbank’s Chairman, Masayoshi Son, wants a deal done. Holding 80% of S stock, it’s his game to play. And he wants T-Mobile.
“But I think the No. 1 favorite, the quickest route to synergy, is the option that we pursued from the start — T-Mobile.” stated Masayoshi recently.
Now all he has to do is pull off what has seemingly become an impossible task.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.
