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SBA Communications Corporation (SBAC), Oi SA (ADR) (OIBR): Buy These High Performing Companies This Month

SBA Communications Corporation (NASDAQ:SBAC)An upsurge in the stock price of a company indicates high performance and strong growth prospects. These companies are financially strong and provide good returns to investors. In this article, I have picked two such companies from the rental and leasing sector, which provided more than 35% in returns last year to investors. Both companies are large cap companies expanding to increase their market presence. Are these companies capable of providing stable returns into the future?

Expansion with the cost effective method

Hertz Global Holdings, Inc. (NYSE:HTZ) began adopting cost initiative strategies in 2006, and it has been able to reduce the company’s overall cost by $2.6 billion. The company’s prime focus has always been the reduction in fleet management cost. Therefore, the company is adopting an alternative channel to sell its cars. The company receives $1100 more per car if it sells the car directly to a customer through a retail outlet. Consequently, the company is increasing its retail outlets from 35 locations to 100 locations by the end of this year. Due to this, the company’s fleet cost will be reduced 4% to 5% by year’s end, and it will contribute towards the company’s goal of reducing the cost by $300 million in 2013.

The company captures 12% market share in the off-airport car rental market, which is an $11 billion market in the U.S. To increase its market share, it is continuously adopting various strategies such as expanding its off-airport presence with cost effective video kiosks at various locations for $10,000 each rather than a brick and mortar locations, which would cost $150,000 each. These kiosks allow customers to interact live with an employee on the video screen. Additionally, it is incorporating its technology of “Hertz Global Holdings, Inc. (NYSE:HTZ) on Demand” in its off-airport segment, which will book a car 24/7 with the help of Internet, which was not previously the case.

Along with the market share upsurge, profit margins will increase from 18.1% in 2012 to 24.6% in 2014. Also, the company’s EPS will increase from $1.36 in 2012 to $1.88 in 2013.

Expansion in Brazil market for additional revenue

SBA Communications Corporation (NASDAQ:SBAC)’ towers outside the U.S. contribute only 14.9% of its total towers. With its low international exposure, the company is focusing on expanding its footprint outside the U.S. It currently has 800 towers in Brazil, a market which will experience an annual growth rate of 5.3% over a period of the next three years. Brazil’s telecommunication market will increase from $73 billion in 2011 to $100 billion in 2017.

Therefore, on July 15 SBA Communications Corporation (NASDAQ:SBAC) entered into an agreement with a Brazilian telecom company Oi SA (ADR) (NYSE:OIBR), and the deal is expected to close by the end of this year. SBA Communications Corporation (NASDAQ:SBAC) will pay $302 million to the Brazilian company, and in return, it will have access to Oi SA (ADR) (NYSE:OIBR)’s 2,113 towers in Brazil. SBA Communications Corporation (NASDAQ:SBAC) funded this agreement with available cash and available credit facility. These towers will contribute $32.2 million of revenue and $67.3 million of cash flows by the end of 2014. In addition, company’s total tower count will reach to 20,000 globally.

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