Small-cap regional wireless play NTELOS Holdings (NTLS) is soaring today after the company announced that it had extended its Strategic Network Alliance (SNA) with Sprint (S) to provide wireless services in the SNA territory through 2022.
The SNA will cover roughly 2.1 million people in West Virginia and part of Virginia, and the extension of the contract represents a clear victory for a small-cap like NTELOS.
And the size of that victory was reflected in the stock on Thursday, which shot up nearly 18.5 percent. The stock gapped up 16 percent to $13.99 a share at the opening bell on the news and quickly climbed to its intraday high of $14.75. The stock pulled back from there but after briefly dipping below $14 a share in early trading, kept share prices over $14.25 apiece headed into the final hour of trading.
The boost couldn’t have come at a better time for NTELOS, which had lost over 40 percent from the start of the year to yesterday. However, while NTELOS has struggled in the early goings of 2014, there’s plenty of reason to believe that the stock could be headed higher.
The first hint may have come a little over a week ago when the stock’s 20-day SMA crossed its 50-day SMA from below, a traditionally bullish technical signal. The cross was slight, and the two remain very close (the 20-day SMA of $13.37 a share is just $0.11 higher than the 50-day SMA of $13.26 a share), but it’s still a sign that the lengthy down-turn for NTELOS was coming to a close.
That perspective was likely bolstered by the price dipping below the bottom Bollinger band on May 20, a classic sign that a stock is oversold.
As such, NTELOS may have been poised to jump even before the news of the deal with Sprint. While the new deal is clearly the catalyst, it appears as though the stock had some clear technical indicators pointing towards a potential jump.
What’s more, its presence on Equities.com’s Small-Cap Stars is a sign that it features strong fundamentals that are largely in line with other successful small-caps in its industry. On the whole, if the sell-off in early 2014 is coming to a close, that could mean that NTELOS Holdings could be getting ready for a sustained run.