Sprint Nextel Corporation (S) Rockets; Take Profits Now?

Sprint Nextel Corporation (NYSE:S), the distant No. 3 wireless carrier in the U.S. behind the behemothian duo of AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), at least has shown some spunk in its company dynamic and in its stock price of late, with Wednesday’s close marking a 52-week high (the stock dropped 4 percent Thursday – probably due to profit-taking) and a 12-percent jump in stock price from the beginning of the calendar year.

Sprint Nextel Corporation (NYSE:S)

Yes, for a $5 stock, Sprint Nextel Corporation (NYSE:S) has been a very hot commodity this year. CEO Dan Hesse has said a lot of the right things, and recent quarterly reports have been pretty good – the company added more than $200 million in free cash to its coffers in the most recent quarter and reduced subscriber churn to about 1.7 percent, which is the best in the history of the company. ┬áPlus, the average revenue per postpaid user jumped by more than four dollars to north of $63, also the best level ever for the company.

Plus, Sprint Nextel Corporation (NYSE:S) has been rolling out its 4G LTE network, which should be fully operational by the end of next year. While it is still behind Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) in the timing of the rollout, Sprint does offer it in five major markets and 15 overall – and CEO Hesse has said before that the company is actually ahead of schedule on its rollout. And with reports that Sprint Nextel Corporation (NYSE:S) is retaining 60 percent of its Nextel customers – who are leaving due to Sprint shutting down the Nextel network by the middle of next year – seems to show that there is a real commitment to turning things around at the company.

There is one stock-watcher who wrote about his general respect and impress at the work Sprint Nextel Corporation (NYSE:S) has done in the last year, but he also gives some reasons to consider taking profits on the stock if investors bought when it was under $2.50 a share. One of the negative factors has been the company’s “low-cost” strategy, which includes its “unlimited” data plan. While this would certain make Sprint different from Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (ANYSE:T), it does severely limit profit margins for the company, and that is where Sprint has been pinched. Secondly, Sprint has to pay for nearly 31 million iPhones from Apple Inc. (NASDAQ:AAPL) through 2013, which means it may have to grab larger market share in a down economy in order to move all that inventory without getting bitten. Plus, the company is having to spend big advertising dollars to keep ace with Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) – and will likely then need better ROI to make it pay off.

Generally, one stock-watcher believes it’s time to take some profits now, and get back in later when the stock is still at a discount. What do you say about Sprint Nextel Corporation (NYSE:S): Are you buying, or selling? That is a good question for some hedge fund managers who are currently invested, like David Einhorn of Greenlight Capital, who had $195 million stake in the first quarter of this year.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!