One of the standouts of today's morning trading session was Crown Castle, which logged a 2.6% performance and outperformed the S&P 500 by 1.7%. The Specialty Real Estate Investment Trust stock is now trading at $125.58 per share and may still have upside potential because it is still -23.78% under its average target price of $164.76. Analysts have set target prices ranging from $130 to $230 dollars per share, and have given the stock an average rating of buy.
The market seems to share this rosy outlook, since Crown Castle has a short interest of only 1.3%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on Crown Castle is to look at the percentage of institutions that are invested in the stock. In this case, 92.9% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
Institutions have vast resources. If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is exuberant market sentiment on Crown Castle because of its an analyst consensus of strong upside potential, a buy rating, a very low short interest, and a significant number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about CCI:
It has trailing 12 month earnings per share (Eps) of $3.73
Crown Castle has a trailing 12 month Price to Earnings (P/E) ratio of 33.7 while the S&P 500 average is 15.97
The company has a Price to Book (P/B) ratio of 7.1 in contrast to the S&P 500's average ratio of 2.95
Crown Castle is a Real Estate company, and the sector average P/E and P/B ratios are 27.16 and 2.39 respectively
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