5-Star Stocks Poised to Pop: Neutral Tandem

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, interconnection services specialist Neutral Tandem (NAS: TNDM) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Neutral Tandem's business and see what CAPS investors are saying about the stock right now.

Neutral Tandem facts

Headquarters (founded)Chicago (2001)
Market Cap$343 million
IndustryWireless communications
Trailing-12-Month Revenue$241.75 million
Management

CEO G. Edward Evans (since April 2011)

COO Dr. Surendra Saboo (since May 2006)

Return on Equity (average, past 3 years)15.7%
Cash/Debt$73.8 million / $0
Competitors

AT&T (NYS: T)

Level 3 Communications (NAS: LVLT)

Verizon Communications (NYS: VZ)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 98% of the 1,003 who have rated Neutral Tandem believe the stock will outperform the S&P 500 going forward. These bulls include mikefango and All-Star ElCid16, who is ranked in the top 10% of our community.

Earlier this month, mikefango listed several of the company's positives: "tndm has no debt and has expanded into europe, asia and around the globe with the acquisition of Tinet SpA. with huge potential in the network effect ... was listed by [Forbes] as one of the top fastest growing companies."

Over the next five years, in fact, Neutral Tandem is expected to grow its bottom line at a solid rate of 12%. That's faster than that of rivals such as AT&T (6%), Level 3 (3%), and Verizon (8%).

CAPS All-Star ElCid16 elaborates on the Neutral Tandem bull case:

I can't fathom a reason that this stock should be trading under $16 bucks, let alone $12 bucks. Sure, they may have slightly overpaid for Tinet, but IP/Ethernet services are currently on a sharp upswing. ... I don't see revenue growth slowing over the next 5 or so years, and these guys have found a way to keep CapEx abnormally low. With no debt and constantly growing FCF, I wouldn't be surprised if they get swallowed up by a larger company at a huge premium. If they don't, I still see this thing doubling within a year.

What do you think about Neutral Tandem, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track Neutral Tandem?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Neutral Tandem. Motley Fool newsletter services have recommended buying shares of AT&T. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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