Retirement Strategy: Who Is Laughing At My 2012 Stock Pick Of AT&T Now?

Sep.24.12 | About: AT&T Inc. (T)

All investors pick a few stocks that they really believe will offer shareholder value in both growth and value. That has been true for my 2012 stock pick of the year, AT&T (NYSE:T).

When I first selected AT&T, it was already a nice part of our "Team Alpha" portfolio, developed by all of our readers here and by my own analysis.

The reasons for my selection of T for 2012 were simple and to the point:

  • At the time, it had a 6% dividend yield and a $28.00 share price.
  • It was a dividend winner for decades, both in paying and increasing dividends.
  • The enormity of the company's footprint was simply too hard to ignore.
  • Being in the technology sector, the retail sector, the cable TV sector, and the cellular sector (and land lines), meant that the company is ensconced in the everyday life of every person in this nation.
  • The future potential of having the finest smartphone lineup of every single wireless carrier on the planet, and at the time, the T-Mobile deal.

The only event that went haywire was that the merger of T and T-Mobile fell apart, and AT&T forked over a cool $3 billion to Deutsche Telecom (OTCQX:DTEGY). The money was thankfully set aside and T recovered from that mess in less than a few weeks.

Now we find ourselves in the interesting position of actually having a stock that could outperform even MY own lofty prediction of $40.00/share.

First let's look at the Team Alpha portfolio again:

Our portfolio now consists of Exxon Mobil (NYSE:XOM), Johnson & Johnson (NYSE:JNJ), AT&T (T), General Electric (NYSE:GE), Annaly Capital (NYSE:NLY), Southern Company (NYSE:SO), Procter & Gamble (NYSE:PG), Intel (NASDAQ:INTC), Realty Income (NYSE:O), Coca-Cola (NYSE:KO), Bank of America (NYSE:BAC), American Capital Agency (NASDAQ:AGNC), Wal-Mart (NYSE:WMT), Cisco (NASDAQ:CSCO), 3M Company (NYSE:MMM), and Bristol-Myers Squibb (NYSE:BMY).

The last update was as follows:

"Team Alpha" Portfolio Update

Stock #Shares 8-31-PPS TotValue
XOM 100 87/shr 8700
JNJ 100 68/shr 6800
T 100 37/shr 3700
GE 100 21/shr 2100
NLY 300 18/shr 5400
BAC 300 8/shr 2400
PG 100 67/shr 6700
KO 100 37/shr 3700
SO 200 45/shr 9000
INTC 200 25/shr 5000
O 150 42/shr 6300
AGNC 150 35/shr 5250
WMT 100 73/shr 7300
CSCO 200 19/shr 3800
MMM 100 93/shr 9300
BMY 100 33/shr 3300
Cash Rsvs x x 34883
Tot Value x x 123633
Click to enlarge

We began with $100k back in November of 2011. A 24% gain was 8 percentage points better than the S&P 500 during the same time frame, OR more than 50% better, without Apple (NASDAQ:AAPL) also.

I can't wait for the next update at the end of this month!

Why AT&T Could Outperform My Lofty Goals

With three months remaining in 2012, AT&T has not stopped gaining. Let's take a look at this amazing chart:

The dividend yield dropped due to a near 40% rise in the share price. The dividend itself was raised by a penny, keeping its dividend winner streak intact as well.

We also have plenty to look forward to for the balance of the year.

  • The holiday season is closing in quickly and that could mean greater retail sales.
  • The new iPhone 5 is setting all sorts of records, even if higher sales figures were anticipated.
  • Uverse has signed up over 2 million users, eclipsing Verizon's (NYSE:VZ) Xfinity already.
  • New broadband is in place to overtake virtually every other wireless carrier capabilities. (Check this out):

"Apple's iPhone 5 has the ability of handling simultaneous voice and data functions, but it turns out that of the top three major U.S. wireless operators, only AT&T will be able to offer the capability. A Verizon spokesman told The Verge that the version of the iPhone 5 supported by the carrier will not be able to handle the feature even on an LTE network."

THAT in and of itself says a whole heck of a lot!

  • AT&T is well positioned in virtually every smartphone release over the next 4-6 weeks. Read this article:

"Among the many manufacturers who recently unveiled their respective devices, Sony is one of them with its official announcement of the Sony Xperia T back in the last parts of August. Since the announcement, rumors have been heard and speculations are pretty rampant claiming that the new Sony handset is already making its way to the shelves of AT&T in US shores. However, it looks like these rumors will pan out because the FCC already gave its nod of approval on the LT30at version of the handset."

Check this article out also:

"Not to be left behind, HTC also has its own press event where the Taiwanese smartphone manufacturer unveiled the HTC Windows Phone 8X, the company's current flagship device for the Windows Phone ecosystem. After the announcement, Canadian carriers Rogers and Bell immediately announced that they will be releasing the HTC Windows Phone 8X in Canadian territories north of the border. No word on pricing or release date yet but we are sure that the two Canadian carriers will release the pertinent details soon enough.

As for the handset hitting the shelves in US shores, AT&T also announced that it will release its version of the HTC Windows Phone 8X. Sad to say and similar to the case of Bell and Rogers up north, there was no mention of price point of launch date on the part of AT&T - the wireless provider just mentioned that it is going to sell the handset 'within the coming months.'"

Oh, and yep, this article too:

"Now, Samsung is doing a Sony-esque move here by rolling out the ICS update to one of its midrangers, the AT&T Samsung Galaxy Exhilarate. That's correct folks, the Android 4.0 Ice Cream Sandwich update is now available for the eco-friendly Samsung midrange smartphone released by AT&T back in June."

As far as I am concerned, this lineup of the hottest products in any market are ready to roll at AT&T. If that does not make the needle move even further on the share price, then I have no idea what will! My previous article even discussed what the CEO had to say and it was ALL GOOD!

Let's finish this up with this little tidbit from this article:

  • "AT&T offers its wireless customers access to the largest 4G system in the nation. The system encompasses two networks - HSPA+ and LTE - that work together.
  • AT&T's network has the fastest 4G download speeds of the four major U.S. carriers, according to a PC World magazine study earlier this year of wireless data transfer speeds in 13 major U.S. cities.
  • To improve service quality in the Orange County area, AT&T increased the wireless spectrum on its local network."

Here is the bottom line as it stands now: $40.00/share might be much too conservative by the end of the year. I think we have another 15% in capital appreciation from here, in the next 3 months.

The company also will broadcast a webinar on October 24th to go over the current quarter results. Maybe we could be in for a surprise.

Disclosure: I am long XOM, JNJ, T, GE, NLY, O, AGNC, INTC, CSCO, WMT, MMM, BMY, KO, SO. 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.