The “Indiana Jones” of the Cell Phone Industry

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This week’s Global Bull Market Alert revisits an old favorite of mine, Millicom International (MICC), the “Indiana Jones” of the cell phone industry.

The explosion in cell phone usage is one of my favorite "top-down" themes in global investing. No technology has spread wider and more quickly than the cell phone. While it took television 30 years to penetrate households across the globe, cell phones managed to achieve this in less than a decade. Relatively cheap, portable, and, today, incorporating email, Internet access, cameras and MP3 players, cell phones are replacing computers as the technology device of choice among countries with the fastest-growing populations in the world. It’s no exaggeration to say that in many developing countries, people are more likely to have a cell phone than to have electricity.

Millicom has adopted a daring strategy to take advantage of this relentless megatrend. While the Vodafones and América M³vils of the world slug it out in the big cell telecommunications markets like Brazil and India, Millicom has cobbled together a patchwork empire that consists of 13 countries ranging from El Salvador, Paraguay, and Colombia in Latin America to Chad, Senegal and Laos in Africa and Asia.

Why is this such a great strategy? Given the relatively low cell penetration rates, Africa is the fastest-growing region of the world in terms of cell phone use. Cell phone penetration is only 14%, compared with 20% in the Middle East, 25% in Asia and more than 80% in Western Europe. And lest you think this isn’t a big enough opportunity, remember that Millicom’s mobile operations have a combined population under license of approximately 260-million people — 80% of the population of the United States.

Exclusive  Markets Steady as Payment Processor Soars

That’s why it’s no surprise that Millicom is growing like a weed — and making money hand over fist, even in the midst of the “Great Recession.” At the end of fiscal 2009, Millicom had 33.92-million wireless subscribers, up 22% year-over-year. And, while most other companies were struggling, Millicom’s quarterly total revenue hit $923.7 billion — a rise of 9.8% year-over-year and substantially higher than the consensus estimate of $876 million. The business also continues to be profitable beyond management’s targets. Quarterly EBITDA margin was 46.6%, compared to 45.4% in the same quarter a year-ago — well above management’s long-run target of 45%.

So, buy Millicom International (MICC) at market today. Place your stop at $76. If you want to bet on potentially even bigger profits, I recommend the July $90 call options (CQD100717C00090000). This is also a position that I hold for my clients at my firm Global Guru Capital.

Portfolio Update

Cognizant Technology Solutions Corp. (CTSH) hit a record of $52.52 last week, before pulling back and ending the week slightly below your entry price. Every cloud has a silver lining and the passage of Obamacare may actually benefit Cognizant, which can offer front and back office assistance to potential clients like insurance providers. CTSH remains a BUY.

UltraShort Euro ProShares (EUO) jumped another 2% last week, falling back from the record high of $20.54 it hit on Thursday of last week. On the one hand, another agreement to bail out Greece strengthened the European currency. On the other, it’s not as if Europe has cured its structural problems overnight, even as the accelerating U.S economy means that forecasts for U.S.-dollar strengthening are being upped daily. EUO remains a BUY.

Exclusive  How to Profit from the Disappearing U.S. Stock Market

Mechel (MTL) soared 11% last week and is now up 25.76% since our initial recommendation. The stock may be hit after news of the explosions on the Moscow metro this morning, making it a good time to enter or to add to your position. MTL remains a BUY. Tighten your stop to $23.95.

National Bank of Greece (NBG) jumped 5.2% last week, as the EU came through with another bailout package in conjunction with the International Monetary Fund (IMF). NBG bounces around with the news of the day concerning Greece but it is encouraging that the stock has just penetrated its 50-day moving average for the first time since the start of the crisis. It may take some patience, but I continue to believe that this pick could be a big winner. NBG remains a BUY.

China North East Petroleum Holdings Ltd (NEP) jumped 4.88% this past week, as investors anticipated the company’s earnings announcement today. Expect the stock to pop on any positive news. I have moved the stock back to a BUY.

P.S. Don’t miss out on the 22nd annual MoneyShow Las Vegas, May 10-13 2010 at Caesars Palace. This event will be your one-stop resource for the comprehensive education, efficient research, and valuable advice you need to make smart investment decisions in 2010 and beyond. Join me there and hear leading experts reveal where they see growth opportunities in stocks, bonds, ETFs, commodities, and options. Also learn about which overseas markets may outperform in the near term. Visit The MoneyShow Las Vegas to register FREE online, or call 800/970-4355 and mention priority code 017443 today!

Exclusive  Ringing Up Profits In Brazil

P.P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy.

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Global stock markets pulled back sharply for most of the past week and then rallied strongly yesterday.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE