AT&T: Next Stop At $40 On Galaxy S3

| About: AT&T Inc. (T)

There's been a lot of buzz about Samsung's new smartphone, the Galaxy S3. And while the smartphone will be sold by the major American phone retailers, I think it will be AT&T (T) that truly benefits from the release. The stock is sitting right up against its 52-week high and still boasts a healthy 4.92% dividend yield. The PE ratio is a staggering 51.69 and expectations are running high for AT&T. I'm all for it and I think that Samsung's release will go far, especially combined with some other factors.

Let's begin with perhaps the only negative development, AT&T must deal with frustrated customers, as it postponed its release date for the new Samsung Galaxy S3 once again. The company initially advertised that the phone would be available by June 21, and after delaying that date, multiple AT&T stores claimed that June 28 would be the release date. After this second delay, the company decided to simply claim that the phones should be available soon, and it provided no specific date. It is currently having trouble with supply issues, but this will hardly qualify as a satisfying explanation for most customers.

Other companies are dealing with this problem as well. Verizon (VZ) originally announced that it would release the phone on July 10, but it has already moved this back to an unspecified date. Sprint Nextel (S) is also having some trouble. Although it delivered the 16GB model on time, it had to postpone its delivery of the 32GB model to those who preordered it. Sprint may have done the best job delivering the phone on time, but AT&T is not alone in having issues. Everyone is experiencing the same issues, and these should be entirely resolved in the not-too-distant future. While customers will not be happy, therefore, this event should not have much effect on the stocks.

This event is minor for AT&T within another context as well. Although this delay will not help it, the Galaxy S3 will add to AT&T's improving selection of smartphones. Some are noticing that although AT&T used to be weak in this respect, it appears to be getting better with releases like this one. I would not be adamant in defending AT&T's selection of products, but I would definitely agree that releasing the Galaxy S3 a little late is better than not releasing it at all. These delays will soon be forgotten, as other companies are also having difficulties, and AT&T customers will be glad that the carrier did indeed get the phone.

How glad will they be? Very glad. Reviews of the phone are coming in and everything appears good. That being said, it should certainly rival Apple's (AAPL) iPhone, of which AT&T is still the biggest retailer. It also comes at a time when competitor Research In Motion (RIMM) continues to circle the drain, falling almost 50% over the last 3 months and sits at the bottom end of its 52 week range (just over $7 to over $33). Strangely, RIM shot up over 6% on July 5th without any company news and the company gained $350 million in value. It just announced a loss of 99 cents per share last quarter, a huge hit to a struggling company.

But that's not why we're here. AT&T does not need Blackberry phones to continue its success, not with Google's (GOOG) Android, Apple's iPhone and the new Samsung Galaxy about to hit the market.

The competition of the three mega-smartphones will only help AT&T. The Samsung phone comes with a $199 tag, provided that customers sign a 2-year agreement with the store (AT&T). This will become a bigger issue when Apple's next generation of iPhone hits the stores for double that price. If Apple does not hit it big with the new round of iPhone, Samsung and AT&T may find themselves choked full of new customers.

The fact is that AT&T started the year at just over $29 and sits now at just under $36. That's 20% and there has not been a setback yet. Blackberry has been the weakest part of the equation (or maybe it's Nokia?), but the strong players are only getting stronger.

AT&T has already surpassed the median target price for the year and I see no reason for it to dip back into that level. If anything, I see AT&T touching $40 soon and lingering around there for the next quarter. My advice would be to get in on AT&T before the Samsung release, or if that's not possible, then before the iPhone 5 is released and enjoy the boost. If anything, the near 5% dividend yield should help sustain any dips the company might find, but, at this point, mobile technology should sustain AT&T's growth for many months to come.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.