Alcatel-Lucent Stock a Bargain Under $3

Alcatel-Lucent (NYSE: ALU ) is one of those tech stocks that many investors
think is dead money a holdover from the tech bubble that has been in a slow
decline ever since. In case you don't remember what the company does, here's
a condensed history: Spun off from AT&T (NYSE: T ) in 1996, Lucent was the
equipment arm of the telecom giant that held a host of patents and specialized
in infrastructure and hardware not services. It joined up with France's
Alcatel in 2006 to create the world's largest equipment supplier to telephone
and wireless carriers. Both Alcatel and Lucent were dot-com darlings that each
went from under $8 per share to $80 during the tech bubble and have languished
in the decade since. In recent history, the five-year returns at Alcatel-Lucent
of -80% make the stock even less attractive to stock market investors. But
investors should take serious notice of this stock. Although telecom equipment
isn't very sexy, the fact that we are living in an increasingly wired world
means that ALU stock has big potential in the years ahead. Day traders have been
having a field day with ALU stock for a while. After all, you can't find many
other $6 billion stocks under $3 per share as of this writing, its Sprint
Nextel (NYSE: S ), Sirius XM Radio (NASDAQ: SIRI ) and battered financial stocks
Lloyds Banking (NYSE: LYG ), Mizuho Financial (NYSE: MFG ) and Nomura Holdings
(NYSE: NMR ). But a look at that list outlines what makes Alcatel-Lucent
different. Sprint is the bastard stepchild of wireless telecom, hasn't turned
a profit since 2007 and is projected to continue posting quarterly losses until
2013. It has struggled mightily to hold steady amid the duopoly of larger
providers AT&T and Verizon (NYSE: VZ ). Sirius has managed to slim itself down
and operate at break-even but after 20 years, the company has been around long
enough to raise serious doubts about whether there ever will be substantive
growth ahead for the satellite radio market. As for financial stocks … well,
you should know the score on that one. Alcatel-Lucent, with its own
profitability problems, certainly doesn't have the best balance sheet in the
world. However, there are indeed growth prospects in the world of
telecommunications equipment. If networks are upgraded and businesses build out
their infrastructures with ALU gear, it could mean big things for this stock.
That's a big "if," of course. Sprint just made big waves by announcing it
effectively has abandoned its 4G platform, and the capital-intensive nature of
network spending makes it a dicey proposition in these tough economic times. But
if and when demand for wireless equipment heats up, ALU will be the premier
provider and reap the benefits. Shares are at a 52-week low, so they could be a
huge bargain under the $3 mark. Jeff Reeves is the editor of InvestorPlace.com.
Write him at editor@investorplace.com , follow him on Twitter via @JeffReevesIP
and become a fan of InvestorPlace on Facebook . As of this writing, he did not
own a position in any of the aforementioned stocks.