Well we are about to close out the first quarter of 2012 and it has been a wild ride thus far. The Dow over 13,000 again, the S&P over 1400, Nasdaq at multi year highs thanks mainly to an unbelievable run up in Apple (AAPL) stock prices.
Obviously the most important reality check on Seeking Alpha is how MY personal stock pick of the year for 2012 is doing; AT&T (T)! (Yes my tongue is firmly planted against my cheek folks).
Back on November 21st 2011, I made my selection with this announcement. Fortunately for me, the stock price has not collapsed so I do not look like a complete "nudnick", but it has not performed at the same pace as the rest of the market.
AT&T : Price: $31.71/share, Dividend Yield: 5.60%, ESS Rating: Very Bullish
At the time of my breathtaking prediction, the price was about $28/share and the T-Mobile (DTEGY.PK) deal was precarious and I made no mention of it in that first article.
Subsequently the deal fell through and AT&T was on the hook for about 3 billion bucks and my "pick" looked like a "pig in a poke". Alas, I was unaware of the fact that they actually set aside the 3 billion that it had to pony up if the deal fell through so the busted deal was probably baked into the share price already and I dodged a bullet without seeing the share price nosedive! My "pick" was not dead after all.
As a matter of fact, since the 3 billion was just a snippet of the cash that AT&T had on hand, they barely flinched. Well, they flinched, but they didn't have a corporate stroke at least.
It was still "game on" for my stock pick.
I wrote a follow up article back in late January which can be reviewed here in which I outlined the T-Mobile merger failure and the subsequent negative articles that hit all the investment magazines and websites. I also noted how AT&T used about 2 weeks worth of cash flow to pay off the fees from the dead deal and how they went back to work to expand their infrastructure on their own.
Actually, I think it might be a benefit to AT&T in the long run that they invest the 39 billion that was going to be shelled out for T-Mobile, in themselves anyway.
Not only did AT&Ts PPS NOT drop but it was and is up around 8-9% even now. They also increased their dividends by a smidgeon, and began spending money on themselves.
Very recently AT&T announced the launch of 10 new Android products as noted in this report to soon hit the market, so they are expanding their commitment in that service as well as their continued amazing success with Apple products, which of course includes the new iPad, which is creating more lines around AT&T stores but has yet to turn into the same blockbuster in sales as the new iPhones will for AT&T. (Check this out)
The U-verse business is growing markedly, and AT&T recently announced an upsurge in subscribers to nearly 3.8 million, which actually surpassed Verizon (VZ) "Fios" in subscriber sign ups last year (Read the report here) reflecting a 27% increase in YOY new subscriptions. It is estimated that by 2013, At&T will take the lead from Verizon in this business segment. All revenues and earnings are yet to be reflected from this profitable business, and is just beginning.
Ok, so AT&T has not taken off as I had hoped, but it is still in the game and I am sticking with this puppy.
Obviously I wish I picked Apple for my stock of the year, but hey, there is still 9 months to go and while T might not be the magical stock I was predicting, it still has all the glitter of a superstar that is paying us 5.6% in dividends to wait for a breakout.
On April 24th T will be announcing their 1st quarter results. I am getting a good feeling about the results and the long term prospects for big T.
Disclaimer: Please remember to do your own research prior to making any investment decisions. This article is not a recommendation to buy or sell any securities or stocks, and is the opinion of the author.
Disclosure: I am long T.
Additional disclosure: I sold naked puts in AAPL to own shares at my entry price.