Towerstream $TWER Trading yesterday and What to expect going forward

Towerstream $TWER traded horribly yesterday. But a couple of positives can be taken away from trading yesterday. One: the previous days price gap was filled so the pricing action going forward should be more smooth. Two: likely lost all the angry shareholders from the secondary offering last summer.

After moving up in the high 6's during the premarket session, Tstream opened the regular session in the high 5's and traded down all day long.  Hopefully if you have read my other posts. And, as I said in those posts, now that a contract with a national carrier has been disclosed, a better way to value Tstream is price per "node".

This morning it looks like it wants to move higher. I suspect it will move sideways the rest of the week as it forms the "handle" part of a nearly 1 year Cup.  For those of you that don't know, a cup with handle is among the strongest technical patterns that can be seen.  Mostly, you see these quite easily and more frequent in mid caps. A breakout of a cup with handle pattern is usually a sign that institutional buying is beginning.

If you are holding positions in Tstream, and you can hold it for a while, I think you will be handsomely rewarded.

Take a look at a 10yr chart of American Tower (AMT). By the way, AMT officially gave Tstream its name.
10 years ago AMT was about the same price Tstream is today. Imagine you had purchased 10,000 AMT for $5 for total of $50,000. Fast forward and today your investment is now worth $640,000 and paying you $3,000 per quarter in dividends. I think the same metrics can be applied here. Obviously much can happen between now and then, but Tstream IS the evolution of the old fashioned tower companies.

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JWells

How to Value Tstream $TWER

Crown Castle recently acquired Next G (a private company similar to towerstream).  Next G has 7000 nodes built.  Crown Castle paid $1 billion to acquire Next G. So to find a value for tower we can should determine what the going rate is for a node. From here we can get a rough estimate of what Tower might be worth.  Knowing this helps us determine how to handle our position.  Applying some simple math to Next G $994,000,000/7000nodes give us the price per node of $142,000.

When we apply this to Towerstream, we can determine its current value of 1500 nodes @ $142,000 gives us a market cap of $213,000. Since Tower has 55 millions shares, we can value them at about $3.87 (213/55).

Towers said they will build an additional 3000 nodes at a minimum over the next 12 months. So the market cap based on the price paid by Crown Castle for Next G would be 4500*142,000=$639,000,000. Divide this by 55 million shares and we arrive at $11.61.

Now we know what an acquisition price is for the company, we need to see if the contract they have signed is inline with tower industry metrics.  If they are, then these prices are great points of reference.  Should the contract come with different metrics, then we will have to regroup and do a little more math.

Assuming the contract is within the norm, I think we will see shares in the neighborhood of $7 next week before  taking a bit of a breather, then we should see shares begin to climb towards the low teens sometime in the fall.

This could all change very quickly though.  Jeff Thomson, CEO of Towerstream said that talks with all carriers are fluid.  So any additional contracts with other carriers will certainly be a positive.  But, he said the cable companies are being equally aggressive, yet not quite as far along (I suspect).

We could be sitting on a real rocket ship with this one.

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FSI International $FSII A Sequential 100% EPS Increase Coming for Q1.

FSI International $FSII shares have been strong since late fall.  I began following them a bit before the mid October breakout from earnings guidance.  This last report was real good but the guidance was fantastic.  They guided EPS at $.20 for Q1.  Putting a pencil to it, we could get a crude value.  I say crude because this gem is highly cyclical and things can change very quickly, so keep an eye on it.

If they could do .20 per quarter over the next 4, we could see $.80 for the year.  with a 15 multiple, shares would be $12.  Since the company doesn't have any debt, liquidation value is about $2. So theoretically, we could potentially value them at $14.

If they meet earnings this quarter and guide higher for Q2, this one could really take off with some strength.

JWells.