• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Telecom Services

Is Fiber-Rich Diet Too Much for Dycom?

Telecom stock is a little too sensitive to developments in fiber deployment.
By JAMES GENTILE Aug 11, 2016 | 04:45 PM EDT
Stocks quotes in this article: DY, GOOGL, T, CMCSA, CTL

Dycom Industries (DY) , a large domestic telecommunications contractor, is under a little pressure following news that there may be slowing in the Google (GOOGL) fiber rollout in the Silicon Valley area in exchange for more aerial fiber spend. The stock was trading down 8.7% late in the day. 

We have reported here that Dycom is a meaningful beneficiary in the current, and accelerating, fiber spending environment. Google is a large customer of Dycom's, but not the largest. Most recently, AT&T (T) , Comcast (CMCSA) and CenturyLink (CTL) are larger -- and they each emphasized fiber spending plans recently, mostly to compete with the increasingly threatening GOOGL to provide ultra-high speed Internet in areas around San Francisco and eventually everywhere. (AT&T is part of TheStreet's Dividend Stock Advisor portfolio. Comcast is part of the Action Alerts PLUS portfolio.) 

DY has been on a tear of late, as a result of this increased spending for fiber deployment. And shares have reached "momentum" territory -- you know, where DY is increasingly linked to Google's nationwide deployment -- and to this crowd, nothing else will matter. So any variances, even little news blurbs reporting deployment delays, will disproportionately affect DY shares. 

I'm of two minds. I love Dycom. It executes well and has the best customer roster in the industry. The company has solid operating leverage to strong telecom spending trends. It's the name to own for the bulls who think our nation will be wired, or wirelessed, to the hilt. We can all use broader and faster data coverage and Google, Dycom, the telco and cable companies all understand this. 

It wasn't long ago, though, that these trends were apparent, but the stock was half of what it is today. That's my rub. I know spending like this is highly cyclical and can change on a dime, more or less. 

When I look at DY shares' sensitivity to the most minimal of news items, it makes me nervous. It shows that some of the 31 million or so shares are in very speculative hands. Proceed slowly, in any event. 

I'll leave this up to you. I'm just pointing out the action. DY is a solid company, and one of the names to play if the belief is that this round of fiber spend has some serious legs. 

If you're in that camp, tomorrow morning will probably present an entry point to put a toe in the water -- at least for a trade.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Gentile had no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Telecom Services | Earnings | Stocks

More from Telecom Services

Verizon: The Risk Is to the Upside

Stephen Guilfoyle
Mar 1, 2021 11:00 AM EST

There is potential to turn VZ from a stable telecom into a 'growthy' type name.

I'm Intrigued by the Recent Pullback in Aurora Mobile

Timothy Collins
Feb 26, 2021 3:30 PM EST

While the Chinese company is still not profitable, it is cash flow positive.

Updating Qualcomm's Break to the Downside

Bruce Kamich
Feb 24, 2021 1:05 PM EST

How do the charts look now?

Verizon Pops on Buffett Buying but Is the Strength Sustainable?

Bruce Kamich
Feb 18, 2021 12:17 PM EST

I am open to a purchase of VZ but the charts have to show me a lot of improvement.

RingCentral Is in an Uptrend but Traders Need to Consider Some Profit-Taking Now

Bruce Kamich
Feb 16, 2021 9:02 AM EST

Let's review the charts and indicators.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:50 AM EST PAUL PRICE

    Michaels: Close to a Deal?

    It appears that a deal could be announced soon. ...
  • 08:34 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 3/3/2021

    SPX (Long-Term View) The 20 DMA @ 3889 with the ...
  • 06:05 PM EST PAUL PRICE

    Michael's (MIK) Up on Takeover Rumors

    The NYT says talks are underway regarding a buyout...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login