Is Liberty Latin America Ready to Breakout? – June 22, 2021

Liberty Latin America Ltd. (LILAK) is a telecommunications company. It is a provider of video, broadband internet, fixed-line telephony and mobile services to residential and business customers. The company’s reportable segments include C&W Caribbean and Networks, C&W Panama, VTR/Cabletica and Liberty Puerto Rico.

LILAC is slowly recovering from the pandemic. In the first quarter, the company’s operating environment was challenging due to reduced tourism and restrictions still in place in a number of markets. Going forward, the firm is looking to bring high-speed connectivity to more households in the Latin America region.

The company had $1.3 billion in cash on hand as of the most recent quarter, compared with only $163 million in short-term debt. However, LILAK’s net profit margin was -10.5%. Over the past year, earnings were down 22.2%, but analysts forecast earnings will rise 95% this quarter.

The stock appears slightly overvalued with a forward P/E of 24.81. The company’s stock performance has been mixed since March as shown in the chart below.

Take a look at the 1-year chart of LILAK below with added notations:

LILAK has been making its way higher since finding its low back in September, but the stock has recently struggled to get past the $15 resistance (red). A solid close above that $15 level should lead to much higher prices for the stock.

LILAK’s 52-week high is also $15. The possible long position on the stock would be on a breakout above that level with a protective stop placed under it.

Have a good trading day!

Good luck!

Author: Christian Tharp, CMT