Goldman Sachs’ Stocks With Highest Consensus Returns: 42 Stocks With The Highest Consensus ROE

12. T-Mobile US, Inc. (NASDAQ:TMUS)

Consensus ROE: 24%

Number of Hedge Fund Investors in Q2 2024: 64

T-Mobile US, Inc. (NASDAQ:TMUS) is among the big three telecommunications carriers in America. As is with other carriers, the firm’s hypothesis depends on its ability to retain and grow subscribers, revenue per subscriber, and presence in the fast growing fixed wireless market. T-Mobile US, Inc. (NASDAQ:TMUS) also benefits from the fact that since communications services are essential products, its revenue is somewhat hedged against economic downturns. The firm has also been making big moves lately, and it is the first major American carrier to partner up with SpaceX to provide satellite based text messaging for customers. SpaceX is launching special satellites for this service, and T-Mobile US, Inc. (NASDAQ:TMUS) customers were able to rely on it to send messages during Hurricanes Helene and Milton that wreaked havoc in the US in October. The firm also has the highest free cash flow margin in the industry, as its free cash flow grew by 54% during Q2. During the quarter, the firm also had 5.6 million fixed wireless broadband customers.

T-Mobile US, Inc. (NASDAQ:TMUS) is also aggressively targeting the fiber market. Here’s what management share during the Q2 2024 earnings call:

“First of all, we’re just really excited about where we are. This was a terrific transaction for us to be able to partner with KKR to acquire Metronet on top of our previous transaction to partner to acquire Lumos. So, now we have the beginnings of a critical mass in the space. For me, this is big. I mean, these two transactions taken together with our partnerships in the wholesale arena are going to allow us to reach millions of homes. The Lumos transaction, we see 3.5 million homes passed by 2028. The Metronet transaction, we see 6.5 million homes passed by 2030. There’s probably a couple more million in the wholesale partnerships we have so far.

So, that’s a pretty significant footprint that we put together. More importantly, we’ve chosen the best assets in the space. We’re very excited about this. Now, to the premise of your question, I think what people can see from our strategy are a number of things. One, our bias is pure play fiber, the simplicity and elegance of that model. It’s doing it with partners so that we can get more leverage on our equity dollars. It’s about best in class assets that are performing and growing like we’re seeing. We have some further appetite, but not much. I want to make that clear. I mean, these transactions that we have done get us millions of homes past and do it in a way that we think is really smart and positive for our shareholders. So, while we’re open-minded to things that fit this strategy, it would have to be the right deal.”