Morgan Stanley’s Best Overweight & Quality Stocks: Top 25 Stocks

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

Number of Hedge Fund Holders In Q2 2024: 64

Average Analyst EPS % Revision: -0.8%

T-Mobile US, Inc. (NASDAQ:TMUS) is a major American telecommunications carrier that provides voice, broadband, and other products. As a result, its hypothesis is dependent on subscriber growth, revenue per account, and fixed wireless subscriber base. Since it’s a carrier, T-Mobile US, Inc. (NASDAQ:TMUS)’s business is also somewhat hedged against economic downturns and provides the stock a defensive aspect as well. The carrier is also one of the top players in its industry when it comes to free cash flow margins. T-Mobile US, Inc. (NASDAQ:TMUS)’s adjusted free cash flow grew by 54% during Q2, which set a new record for the firm. It faces several catalysts that can help the share price in the future, especially when it comes to fiber internet and fixed wireless growth. As of Q2, T-Mobile US, Inc. (NASDAQ:TMUS) had 5.6 million fixed wireless broadband subscribers, and it also acquired fiber broadband provider Metronet earlier this year to bring 2 million fiber consumers in its fold.

T-Mobile US, Inc. (NASDAQ:TMUS)’s management shared key details about its fiber plans 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.”