Dial Up AT&T

| About: AT&T Inc. (T)

AT&T (NYSE:T) has been a core holding in most conservative portfolios for years and will probably continue to stay there. The stock has great price stability, a P/E lower than the market and a dividend rate higher than the market. Since beating the Street's earnings consensus by about 3 cents it's had pretty good price momentum over that last month as is shown in this hourly trading graph provided by Barchart:

During the past 6 months the stock has held its own against the market when measured by the Value Line Index:

AT&T Inc., together with its subsidiaries, provides telecommunications services to consumers, businesses, and other providers worldwide. The company’s Wireless segment offers wireless voice and data communication services, such as local wireless communications services, long-distance services, and roaming services. This segment also sells various handsets, wirelessly enabled computers, and personal computer wireless data cards; and accessories, including carrying cases, hands-free devices, batteries, battery chargers, and other items. This segment sells its products through its own stores, or through agents or third-party retail stores.

Its Wireline segment provides data services comprising switched and dedicated transport, Internet access and network integration, U-verse services, and data equipment; businesses voice applications over IP-based networks; and digital subscriber lines, dial-up Internet access, private lines, managed Web-hosting services, packet services, enterprise networking services, and Wi-Fi services, as well as local, interstate, and international wholesale networking capacity to other service providers. This segment also offers voice services, such as local and long-distance, calling card, 1-800, conference calling, wholesale switched access, caller ID, call waiting, and voice mail services; and application management, security services, integration services, customer premises equipment, outsourcing, government-related services, and satellite video services.

The company’s Advertising Solutions segment publishes yellow and white pages directories; and sells directory advertising and Internet-based advertising and local search. In addition, the company provides customer information services. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is headquartered in Dallas, Texas. (Yahoo Finance profile)

Factors to consider:

Barchart technical indicators:

  • 100% Barchart technical buy signal
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 8 new highs and up 5.41% in the last month
  • Relative Strength Index 71.73%
  • Barchart computes a technical support level at 32.32
  • Recently traded at 32.92 with a 50 day moving average of 31.13

Fundamental factors:

  • Wall Street favorite for conservative income portfolios
  • 37 Wall Street brokerage firms have assigned 37 analysts to follow the numbers
  • Analysts predict revenue will increase by 1.60% this year and another 1.40% next year
  • Earnings estimates are for an increase of 8.60% this year, an additional 7.10% next year and expected to continue by 9.59% per year over the next 5 years
  • P/E ratio is 14.65 and is lower than the 15.40 P/E for the market
  • The dividend rate of 5.39% is about 70% of projected earnings and higher than the 2.30% dividend rate of the overall market
  • The T-Mobile venture is cancelled and seems to have the cost fully assimilated into the price
  • Although landlines are declining this is the cash cow that feeds the rest of the companies capital investments and liberal share buy-back program
  • The company has an A++ financial strength rating and a very high stock price stability ranking

General investor interest:

  • As measured by the readership of Motley Fool the individual investor likes this stock
  • 5,518 readers voted a high 97% that the stock will beat the market
  • The more experienced and savvy All Stars agree with a 95% vote for the same result
  • Fool notes that articles and reports on the stock have been about 96% favorable on this issue
  • JP Morgan and HSBC have it on their buy lists and Gary B Smith, Wayne Rogers and Jim Cramer have all given T a thumbs up

I like to see how a stock's price has held up compared to its competitors. and while T was up 3.30% in the past year China Mobile (NYSE:CHL) was up 21.90%, Vodafone (NASDAQ:VOD) was up 1.85% and Verizon (NYSE:VZ) was up 6.83%:

Summary: AT&T is a solid stock for conservative income investors. You won't get rich, but with P/E appreciation and a good dividend rate, long term investors should see a 12% -14% annual total return over the next 5 years. Income investors might even consider selling a few calls to boost the income stream. Watch the 14 day turtle channel for support levels:

Disclosure: I am long T, VZ.

Additional disclosure: The stocks mentioned above may be held in either personal or family member accounts and/or mutual funds and separately managed accounts at Marketocracy Capital Management from whom I receive compensation as a financial analyst