Briton Ryle at The Wealth Advisory loves to tout the dividend-paying stocks that underly some big trends, and, of course, to hint at them in misleading ways to make them seem every more secretive and special… which doesn’t mean the stocks are necessarily bad ideas, but does mean we should dig deeper and understand the risks and the real story.
The two that have been pushed hardest over the past several years have been his pitch for getting something like royalties on Netflix and Google, which was just a tease about buying a data center REIT (CoreSite, as it happens, a stock I’ve also held for a long time); and, more recently, his pitch about getting back door “Prime Profits” payments from Amazon, which was a tease for the industrial REITs who own warehouses that are leased to Amazon (ProLogis was the clearest one). Those are fine companies, with relatively low risk but, of course, high valuations recently (REITS have been bid up dramatically over the past few years, especially specialty REITs with good dividend growth), and nowhere near as direct a connection to sexy high-growth ideas like Netflix and Amazon as was implied.
I’m sympathetic with the basic strategy, and have had a lot of success with many of the specialty REITs over the years even if the “story” pitch he uses is often pretty ridiculous, so in several cases The Wealth Advisory has also been touting stocks that I already own… which means I’m always curious to see what the next one might be. So with that out of the way, what’s the next big spiel from Ryle about? It is, of course, a play on another hot story — in this case, the buildout of 5G mobile networks.
Here’s a bit from the top of the ad:
“5G ‘Tollbooth’ Firm Makes America’s Largest Media Companies Pay Through the Nose
“Comcast, Verizon, T-Mobile, and even the Department of Defense will have to pay this company a ‘toll’ to use the 5G network
“It trades for $8 right now… but I expect it to climb to $68 in the next five months…”
That sounds an awful lot like the many, many teaser pitches we’ve heard about one or all of the “big three” cell tower REITs (American Tower (AMT), Crown Castle (CCI) and SBA Communications (SBAC))… but none of them have sub-$100 share prices, let alone $8. So at least we’re going to hear something a little different to cut through the boredom of “yep, it’s another pitch for AMT.”
And, of course, it’s super-secret (why else would you pay The Wealth Advisory $49 for the idea?)…
“… this little firm is leading the charge to 5G.
“Even the U.S. government knows it — which is why they’ve decided to partner with it.
“But you’ve likely never heard this company’s name.
“Actually, almost no one has.”
We’re told that this company has already inked deals with the big cable and telecom firms…
“They’ve signed almost ten billion dollars worth of contracts with this little tech firm, and once that money starts rolling in, I expect this stock to be trading for at least $68 a share.”
He also makes the “we need more towers” argument that we often see with 5G chatter — mostly because the part of 5G that uses millimeter wave higher frequency spectrum can’t travel as far or get through obstacles….
“These “M-waves” can’t travel very far from their source (only about 1,500 feet before the signal dies out). And they can’t travel through things, like trees or mountains or buildings.
“So, if we used the towers we have now, you wouldn’t be able to get a 5G signal unless you could actually see the tower the signal was coming from. Can you imagine dropping a call every time you walk under a tree?
“But this company has figured out a way around that….
“Instead of sending everything from one big tower directly to you, they’re going to use a bunch of tiny antennas to relay the signal to you….
“These new antennas will be about the size of a small refrigerator, like the kind you might find in your room at the Holiday Inn.
“So even though the signal will still initially come from a giant tower, it will bounce off of these smaller antennas to get around anything in its path.”Are you getting our free Daily Update
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OK, so that’s part of the standard 5G narrative as well — we’re told that large networks of “small cell” antennas need to be deployed (and are being deployed, especially in urban areas… Crown Castle in particular among the tower REITs has built out a huge network of them already).
So what does this company have that will make these small cells possible? More from the ad….
“… it already has the infrastructure in place that’s required to get these 5G antennas up and running….
“This firm already has an extensive nation-wide fiber network that’s up and running.
“And this network is going to be the lifeblood of 5G.
“It’ll just take these new smaller antennas and attach them right to its fiber network. It’s a simple plug-and-play move.”
And we’re shown that the fast fiber network this company has gives them a big advantage, with more fiber route miles than anyone else — apparently they have 5.6 million miles of fiber in the U.S., which is much more than AT&T or Verizon or the othe