Wow, what a difference a few days make! The Lawrence Summers anxiety turned into the Janet Yellen euphoria. And Wednesday's dovish announcement by the Fed fueled an already enthused market. It's a time to consider stocks that participate in the upside, but lead to less anxiety in case of a market downdraft. I make the case that AT&T (T) might fit the bill in that regard. Here are 5 reasons why.
Product and Market Push. AT&T is set to announce Samsung's Galaxy S III mini later this month, which should give it product refresh momentum going into the holiday season. The cash it is raising from the recent asset sales also suggests international expansion potentially in Europe (where it should get a good price, given Europe's tepid markets).
Seasonal Tailwinds. The following chart from EquityClock shows seasonality in T stock over the last 20 years. It shows a fairly strong tendency for T to do well in fall and poorly in the first two months of the year.
No (immediate) Taper Tantrums. A number of dividend-oriented stocks ranging from Telecoms such as Verizon (VZ), utilities such as Duke (DUK) and REITs had been depressed with the specter of a Fed Taper and a rise in interest rates. Today's surprising (even stunning) dovishness on the part of the Fed, creates a tailwind for the general class of income stocks of which AT&T is a part.
Analyst Upgrade. Four analysts have upgraded AT&T in the last two weeks, more so than in the last six months. And that doesn't include the Credit Suisse upgrade with a price target of $38.
Good Technicals. T stock is well behaved and shows solid support at about $33 (coincidentally the price at which three of the buy recommendations occurred) and some resistance at $38-$39. There is also likely to be an end-of-year dividend boost, which should strengthen the support if not act as a catalyst.
All in all, I'm not here to convince you that AT&T is the next cool thing in this new-era Internet mania redux. But for conservative growth investors looking for an attractive dividend supported by moderate growth and no real gotchas, T could be your cup of tea.