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BC-successful-investing 08/14 TMS Original

SUCCESSFUL INVESTING For release 08/14/11 (NOTICE: For retransmission or other content delivery inquiries, please contact TMS Customer Service, 1-800-346-8798, Cell Tower Leader Continues Growth

Tribune Media Services

About American Tower Corp.

Ticker: AMT

Exchange: NYSE

What does the company do? Wireless and broadcast communications site operator

2010 Financial report:

Net sales: $2 billion

Net income: $373 million

Q. I would appreciate some word about the stock of American Tower Corp.

A. Growth of this profitable cell-tower operator seems assured because of the rising global demand for high-speed data and on-demand video services.

Major customers of its wireless and broadcast communication sites are wireless carriers compelled to upgrade networks to keep up with their competition.

Already boasting more than 38,000 tower sites in the U.S., Latin America, India and Africa, American Tower continues to acquire more. Recent deals included sites in Ghana, South Africa and Colombia -- countries with relatively low wireless penetration and considerable potential.

American Tower Corp. (AMT) shares are up 4 percent this year following a gain of 20 percent last year. Second-quarter earnings were up 16 percent as Verizon and AT&T continued to invest in their wireless networks by adding equipment and increasing their site density.

A proxy statement has been filed with the Securities and Exchange Commission by American Tower to convert its corporate status to a real estate investment trust (REIT). That structure provides tax advantages for companies that have most of their assets and income in real estate and pay out most of their taxable income in dividends. A special stockholder meeting will be held in the fourth quarter to consider the change for next year.

Moody's Investors Service has said American Tower will remain investment grade after the conversion.

Separately, there is a tax concern: American Tower received an SEC subpoena for tax-reporting and accounting documents from 2007 through the present. The firm said it will cooperate fully with the request. In an earlier filing, the company said the manner in how it handles uncertain tax benefits could potentially be challenged by tax authorities.

Consensus analyst recommendation on the volatile shares of American Tower is "buy," according to Thomson Reuters, consisting of seven "strong buys," 13 "buys" and two "holds."

After joining the company as COO in 2001, James Taiclet became CEO in 2003 and chairman in 2004. He improved prospects by acquiring rival SpectraSite in 2005 and has bolstered the firm's balance sheet by reducing debt.

American Tower has the industry's longest contracts, strong cash flow and an aggressive stock buyback program. Nonetheless, it is susceptible to reduced business from wireless-carrier consolidation (such as AT&T acquiring T-Mobile), possible shifts in wireless demand and inherent overseas risks.

Earnings are expected to increase 6 percent this year versus 20 percent predicted for the telecommunication services industry, according to Thomson Reuters. Next year's projected 40 percent gain compares to 19 percent forecast industry-wide. The five-year annualized earnings gain estimate is 18 percent versus 17 percent expected for its peers.

Q. What do you think of my shares of GAMCO Westwood Equity Fund? I've been disappointed.

A. Its emphasis on quality means it lags when the market is led by the stocks of weaker firms carrying more debt.

Susan Byrne, who has managed the fund since 1987, prefers cash-rich, stable, well-entrenched companies whose prospects haven't been fully realized by Wall Street. She typically holds a concentrated portfolio of around 50 large-cap stocks and is willing to make sector bets.

The $116 million GAMCO Westwood Equity Fund "A" (WEECX) is up 17 percent over the past 12 months to rank in the lowest one-third of large growth-and-value funds. Its three-year annualized decline of 1 percent places it in the bottom one-tenth of its peers.

"This fund can serve as a core holding, but investors have to understand it doesn't buy companies that are overleveraged (have too much debt)," said Andrew Gogerty, mutual fund analyst with Morningstar Inc. in Chicago. "If you buy strong companies during heady market rallies when quality isn't a consideration, this fund is going to underperform."

Eight industry analysts assist Byrne, who is the founder and chief investment officer of Westwood Holdings Group. Their stock picks typically feature global revenue streams, attractive dividends and future growth prospects. The fund's 15-year annualized return of 7 percent ranks in the top one-fourth of its category.

Financial services represent 20 percent of GAMCO Westwood Equity, with other concentrations in healthcare, industrial materials and energy. Top stock holdings were recently MetLife Inc., Pfizer Inc., JP Morgan Chase & Co., AT&T Inc., Wells Fargo Co., Johnson & Johnson, Anadarko Petroleum Corp., Abbott Labs, Walt Disney Co. and Dominion Resources Inc.

This 4 percent "load" (sales charge) fund requires a $1,000 minimum initial investment and has an annual expense ratio of 1.79 percent.

Byrne also manages the WHG Large Cap Value Fund (WWLAX), which is the same fund as GAMCO Westwood Equity but with a lower expense ratio, noted Gogerty. That 5 percent load fund with annual expense ratio of 1.25 percent is a better bet for new investors, he believes, though current GAMCO Westwood Equity holders should stay put rather than make a switch.

Q. Over the long run, meaning 10 years or more, what is considered a good investment rate of return? I am confused by the figures and advice I have seen.

A. There is no one right answer because returns in any 10-year period are dictated by the prevailing interest-rate and economic environment. For example, Treasury-bill rates and expectations for investment returns were high in the 1980s but are low today.

"Average rate of return is fiction because we don't get year-after-year average return," said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc., Bloomfield Hills, Mich. "It is more important to figure the rate of return you will need to reach your goals without taking excessive risk."

Sometimes investors focus on hitting a specific return and take on too much risk to achieve it, she warned, when in reality they really didn't need it to meet their goals.

Choose wisely: While stocks are most likely to exceed inflation, many investors set unrealistic expectations for them. Bonds can beat inflation, but higher-return bonds require greater risk. Gold is volatile, real estate has rough patches and bank certificates provide safe but modest returns.

(Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, Ariz. 85004-1248, or by e-mail at (C) 2011 TRIBUNE MEDIA SERVICES, INC.

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Published August 13, 2011 at 8:00 am (Updated August 13, 2011 at 8:40 am)

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