TMUS Might Be Ready To Rip

29 lis 2023

T-Mobile TMUS is the nation's third largest mobile carrier, behind Verizon VZ and AT&T T

Since 2020, the company has grown revenues and profits considerably as synergies with combined company Sprint have taken hold, and the valuation has come back into an appealing area as well, at 23x earnings:



This may look expensive to some, but for a company this large, with such strong network effects and unbelievable cash flow, it seems reasonable to us.

Technically, the stock rallied into the end of 2021, but has traded sideways since over the past two years. We think a breakout could be in the cards, as the stock's megastructure has formed a kind of ascending triangle. We expect that further progress in earnings could ignite the stock, sending shares as high as $180.

While not an explosive move, playing the underlying shares using call option contracts could be a highly profitable endeavor.

On a breakout, we like 6-month out, at the money contracts as a way to play the name. They would require significantly less capital to buy into a position vs. the equity, and should present similar upside reward in a breakout scenario.

Be sure to keep this one on your radar for when the time comes.

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