AT&T: Further Gains Could Be Around The Corner

| About: AT&T Inc. (T)

Our stock pick of 2012 is AT&T (NYSE:T) and it has not disappointed shareholders. The stock price has risen from about $28.00/share when it was selected, to $37.76/share as of 9/19. A 32% increase is quite impressive, but I believe we could see another 15-20% within the next 3-6 months.

A $43-$46.00 share price is well within reach for the following reasons:

iPhone sales, as well as other smartphone sales, seem to be at historic levels

According to this report, CEO/Chairman Randall Stephenson made this comment at a technology conference:

Speaking at a Goldman Sachs technology conference in New York, AT&T CEO Randall Stephenson said that the iPhone 5 is "selling very, very well," and AT&T is making good progress in building out its LTE, or 4G wireless network.

We're having record sales with iPhones, and across the board, the portfolio of all that the smartphone business is hot," Stephenson said.

The top executive of a public company does not make this kind of public statement "off the cuff". I think he might even be conservative given the record sales by Apple (NASDAQ:AAPL) themselves.

Insider buying has been brisk

During the month of August, top executives accumulated more than 2.1 million shares while selling only 77 thousand. Most of the purchases were on the open market at $36.64/share according to SEC form 4 filings.

As per Fidelity Investments, the insider buying trend has been very positive.

Major analyst upgrades to buy or strong buy ratings

Ativo Research, Jefferson Research, Market Edge, and Ford Equity Research all raised their ratings to either most favorable or very favorable with a buy or strong buy, recommendation.

The current ESS (Starmine) rating stands at 9.2 out of 10, which is "very bullish". That is the highest ranking a stock can receive from Starmine.

The dividend yield is currently at 4.68% with a $.44/share dividend ready to be announced within the next few weeks

Given the dividend winner status of AT&T over the course of more than 2 decades, we envision another increase in the dividend rate in the first quarter of 2013. That has been the track record of AT&T, and there are no signs of that changing.

Finally, take a look at this chart:

With revenues dropping, T has maintained and even increased its earnings per share and profit margins. If what Stephenson has stated comes to fruition, revenues will more than simply bounce back.

Ergo, if revenues surge and margins and profits keep moving up, the share price might even be cheap at $50.00/share.

At that same Goldman Sachs technology conference noted above, AT&T's CEO also said:

Stephenson said that he still believes AT&T will be able to report wireless profit margins of 40% in 2012, and maintained the company's outlook for selling 25 million smartphones this year.

"You have to do these kind of margins to generate a return on investment you put in the ground," Stephenson said.

We really, REALLY, like our 2012 stock pick of the year.

Disclosure: I am long T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.