Few investors know the small cap companies that operate behind the scenes when they make a call with their cell phone providers. Inteliquent is one of those companies, and at a $750m valuation, it’s clearly headed to a $1B valuation, as the stock rallied 25% today on the deal. The company also pays a 0.15 cent dividend (unusual for small cap) and reported earnings that are better than expected.
Today's agreement provides that T-Mobile will use Inteliquent, Inc. (IQNT) as its sole provider of voice interconnection services for all calls exchanged between T-Mobile (TMUS) and nearly all other voice providers in the United States.
"We are thrilled to enter into this new agreement with T-Mobile," said John Bullock, Chief Technology Officer at Inteliquent. "In addition, our new 'Infrastructure as a Solution' offering opens up an entire new market for us to serve. Historically, we have been the leading provider of connectivity between wireless and other competitive carriers, but not from those carriers to the incumbent local exchange carriers. Going forward, our Infrastructure as a Solution offering allows us to serve the enormous amount of traffic that is originated and terminated to legacy landline networks from wireless and other competitive carriers. We believe that billions of minutes of additional traffic may become addressable with this service and that others will be drawn to such an offering – one that may be a challenge to replicate due to our superior quality of service, customer care and scale."
A Bright Spot in a Volatile Year for INTQ
Until now, 2015 has not been all roses for Inteliquent. The company was down 25% in Q1 before righting theship, and today's action takes them +17% for the year. This stock is liquid enough for retail investors and portfolio managers alike, with more than 200k changing hands every day. Historically, IQNT traded as high as $31 per share in summer of 2009 and as low as $2 per share in late 2012, when they had a massive tax loss selling wave. Many Telecom Hedge Funds exited this stock as we ended 2012 and bought shares back in Q2 2013, evidenced by the explosion in volume between five and six dollars. It shows how long you need to hold stocks to get paid properly, as shares test the $23 dollar level today, completing a 4x return.
The small cap field has many unknown players, and we at Eqiuities.com hope that you’ll come here to find information about these companies. The companies do not pay us to write these articles – we spend each day searching for small cap stocks above a $50m valuation on their way to $1B, and we hope you will read our work, because we love what we do.
Steve Kanaval is the author of the upcoming Equities.com's Small-Cap Throwdown, a premium newsletter designed to help investors identify the best small-cap stocks to add to your portfolio and trading ideas to profit off them. The first issue pits the hottest beverage small-cap stocks against each other to find a winner. Sign-up here for a free issue today!
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