I love helping people make money. That’s why I started my research company and newsletters, and it’s why I take every opportunity I can to talk about it on my television show. Nothing beats getting a phone call, email or tweet from someone telling me that they have earned nice profits on a stock I mentioned.
I was recently asked on Twitter for one good stock pick and Iridium Communications (NASDAQ:IRDM) was what I suggested. I definitely recommend owning a lot more than one stock, but it was a fun question and IRDM stock looks compelling. However, it is on the risky side (which is why you need to own more than one stock) … I recommended IRDM to my wife, so it better work!
The company operates the Iridium satellite constellation, a system of 66 active satellites — the world’s largest commercial constellation — used for worldwide voice and data communication from hand-held satellite phones and other transceiver units. The network is unique because it covers the whole Earth, including poles, oceans and airways, with 95 satellites launched so far. The satellites are sometimes visible at night as satellite flares, which is pretty cool.
In the most recent quarter, which was just reported on July 31, earnings missed by 2 cents, but revenue of $134.9 million was 21% higher than last year and beat the Street at $120.53 million. Most of the revenue, 77% to be exact, came from services and the rest was thanks to equipment sales and engineering and support products.
Guidance is often the most important part of an earnings report, especially right now with a lot of companies seeing strong growth. Investors want to know what’s to come. In this case, management raised their full-year revenue guidance, forecasting sales growth of $501.8-$510.8 million versus previous guidance of $492.9-$501.8 million, also well above the consensus estimate of $487.5 million.
IRDM Stock: The Land of Milk and Honey
In fact, CEO Matt Desch said on the conference call that the company is near the financial “land of milk and honey” as IRDM stock is beginning to see the payoff from its 10-year, $3 billion strategy to replace its original aging satellite network with a network of 75 next-generation satellites.
IRDM stock has had a strong few months. After opening 2018 at $11.65, it has climbed 60% to nearly $19. In the nearer-term, the shares have printed a series of higher highs and higher lows, indicating that the underlying uptrend is set to continue. They are also holding nicely above the 50- and 200-day moving averages (the blue line and red line, respectively), which are also steadily rising.
As I said, IRDIM stock is a compelling idea, but you need to be aware of the potentially higher risk, especially after the recent shot higher. As long as the company keeps executing here, I see the stock breaking to new highs.
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