Of the four big U.S. wireless service providers, only one has been a winner over the past several years. Who might that be, you ask? T-Mobile Us Inc (NASDAQ:TMUS). TMUS stock is up 190% over the past five years
Meanwhile, the other three of the big four carriers have fumbled. In the same period, market-leader Verizon Communications Inc. (NYSE:VZ) has seen its stock drop 7%. Shares of AT&T Inc. (NYSE:T) have fallen 9%. Sprint Corp (NYSE:S) has dropped 16%.
That is a pretty big gap, so let me repeat that just so we are clear. While the others are all down, T-Mobile stock has nearly tripled in the last five years.
And, in case you were wondering, this isn’t the case of a runaway stock. The TMUS stock rise has been accompanied by strengthening fundamentals. The company has rattled off 18 consecutive quarters of adding more than a million phone customers, with a base now above 70 million, more than double where it was five years ago.
Will this rally in TMUS stock hold? I think so. The company has three major catalysts over the next several years which should propel shares higher.
Here’s a deeper look.
3 Big Catalysts For TMUS
TMUS stock essentially has a trio of key catalysts over the next several years: Continued growth in the un-carrier model; 5G roll-out; and, retail store expansion.
T-Mobile’s un-carrier model has been a huge hit among consumers. It is a unique business model in the wireless market that really makes customers feel like they are getting a great deal, which they are.
The company offers a ton of services and perks at exceptionally reasonable prices. Some of these perks include things like Netflix On Us, which launched late last year. Considering the continued robust growth of Netflix, Inc. (NASDAQ:NFLX), T-Mobile’s Netflix move should provide a multi-quarter and even multi-year tailwind for membership additions.
Beyond the un-carrier model, T-Mobile stock should get a big boost from the widespread roll-out of 5G starting later this year and carrying into next year. The 5G catalyst will create a lot of excitement and opportunity for all wireless players, but TMUS seems particularly ready to seize this opportunity. CEO John Legere believes 5G will be huge for the company as they leapfrog AT&T and Verizon.
That may not happen, but 5G does promise significant changes and opportunity for TMUS to pass VZ and T. That opportunity alone is enough reason to own TMUS stock here and now.
Perhaps T-Mobile’s biggest catalyst over the next several years, however, is its massive retail unit expansion. According to management, there are roughly 100 million people in the U.S. with whom T-Mobile has zero penetration. That is about to change. T-Mobile is aggressively expanding its retail presence in those “greenfield” markets to start gaining traction among those 100 million Americans.
With an innovative, differentiated and still-getting-better un-carrier model underlying the business, T-Mobile should have no problem rapidly growing market share in these new markets.
Bottom Line on TMUS Stock
If you put those three catalysts together — un-carrier model, 5G roll-out, and retail expansion — then TMUS stock has some serious firepower to head higher over the next several quarters and years. At under 20-times forward earnings versus a five-year average forward earnings multiple of 26, TMUS stock is pretty cheap and has room for multiple expansion in the event that the numbers are good.
The stock is pretty cheap, and the growth story is pretty good. That makes TMUS stock a buy here and now.
As of this writing, Luke Lango was long TMUS and T.