ADC Telecommunications' (NASADAQ: ADCT) stock has bided time over the past four months, since the Buy rating on June 10, 2009 at a price of $8.46, but that in no way changes the company's positive. Hence, look on the current roughly $7.50 price as another chance to scoop up ADCT's shares at a reasonable price, and I'm Reiterating my Buy rating.
ADCT is a global supplier of broadband network equipment, software, and systems integration services that enable communications service providers to deliver high-speed internet, data, video, and voice services, with an emphasis on that critical 'last mile' (homes/businesses) portion of the network.
The growth proposition with ADCT? The company's China business, Century Man, will yield promising returns, as a result of its participation in China's 3G network buildout.
Further, a domestic broadband stimulus package in the U.S. may provide an additional tailwind. The First Call F2009/F2010 EPS estimates for ADCT are 13 cents to 39 cents.
To be sure, a longer than expected decline in telecom spending and/or the loss of a large customer(s), are risks, moving forward, but the risk/return is still tipped way in favor of the Buy rating.
Stock Analysis: ADC Telecommunications' is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in ADCT now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your ADCT position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $3.
- -
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
