Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Has Clearwire Become the Perfect Stock?

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Clearwire (UNKNOWN: CLWR.DL  ) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at Clearwire.


What We Want to See


Pass or Fail?


5-year annual revenue growth > 15%




1-year revenue growth > 12%




Gross margin > 35%




Net margin > 15%



Balance sheet

Debt to equity < 50%




Current ratio > 1.3




Return on equity > 15%




Normalized P/E < 20




Current yield > 2%




5-year dividend growth > 10%




Total score


3 out of 9

Source: S&P Capital IQ. NM = not meaningful; Clearwire reported no revenue five years ago. Total score = number of passes.

Since we looked at Clearwire last year, the company has doubled its score. The stock has jumped more than 40% in the past year, but most of those gains have come recently as a result of takeover speculation that now looks like it will become reality.

Clearwire provides wireless services via WiMAX technology. Sprint Nextel (NYSE: S  ) is Clearwire's biggest customer and holds a minority stake in Clearwire, yet over years of a long and complicated relationship, Sprint has been reluctant to fully commit to the company. In fact, Sprint expects to stop making Clearwire-compatible devices after next year, calling into question the billions that Sprint has spent keeping Clearwire afloat given its huge debt load.

More recently, though, Sprint and Clearwire seem to be getting closer together rather than further apart. In October, Sprint sought to increase its stake in Clearwire to 50.8%, leaving Comcast (NASDAQ: CMCSA  ) and Intel (NASDAQ: INTC  ) as minority shareholders. Clearwire shareholders saw share-price gains, but they later fell back somewhat on disappointment that Sprint wouldn't buy the entire company, especially in light of Sprint's own deal to get a big capital infusion from SoftBank.

Yesterday, Sprint finally did just that, offering to buy the entire portion of Clearwire that it doesn't already own. Still, although Sprint bid $2.90 per share, Clearwire's stock now trades above that level, as shareholders hope for a competing bid. Clearwire does have valuable spectrum, which would be a great asset for AT&T (NYSE: T  ) or Verizon (NYSE: VZ  ) to pick up. Yet hopes of a bidding war are likely in vain, as the company is unlikely to attract other bidders with Sprint holding 48% of the shares.

Clearwire therefore has little chance of improving to become a perfect stock. But with Clearwire's spectrum, Sprint may have a better chance to stand up to its larger rivals.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

Intel's not a big player in telecom, but it has many investments in small companies with promising technology. Can the chip giant use those investments to move forward with its own business? In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Better yet, you'll continue to receive updates for an entire year. Click here now to learn more.

Click here to add Clearwire to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2155426, ~/Articles/ArticleHandler.aspx, 10/25/2016 12:14:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,179.10 -43.93 -0.24%
S&P 500 2,144.88 -6.45 -0.30%
NASD 5,287.73 -22.10 -0.42%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
CLWR.DL $0.00 Down +0.00 +0.00%
Clearwire Corp CAPS Rating: **
CMCSA $65.30 Up +0.34 +0.52%
Comcast CAPS Rating: ***
INTC $35.06 Down -0.21 -0.58%
Intel CAPS Rating: ****
S $6.40 Down -0.53 -7.59%
Sprint CAPS Rating: **
T $36.78 Down -0.08 -0.22%
AT and T CAPS Rating: ****
VZ $47.98 Down -0.23 -0.48%
Verizon Communicat… CAPS Rating: ****