Yes, AT&T (NYSE:T) is my pick of year for 2012. Yes, I am rooting for the stock to go over $40.00/share and I believe by the end of this year, it will be over $40.00/share.
The stock has dipped in the last 7 days, by more than 6%, and represents another buying opportunity before its next move up, in my opinion of course.
Let's Look At A Few Charts
This chart from Fidelity Investments is a 10 day chart and you can see that last Thursday the share price was around $38.50. Today it closed at about $36.25. Pretty close to a 6% retracement in the share price.
Now lets look at this chart;
This is a one year chart also from Fidelity. It shows a dramatic increase in share price from when I chose the stock back in December, right up until today. That is not the point of this chart however.
Since I am no longer a trader, I rarely pay attention to technical analysis, but this little gem was simply too difficult to ignore.
Take a look at the past retracements in the share price, of roughly 6% (several, a tad more). To wit; late November/early December, late January/early February, mid-April, late August, and this past week or so.
The retracements were almost immediately followed by a quick reversal upward, making new highs for the year. I believe we are looking at the very same scenario. This is a very clear "technical" indicator that screams BUY when I look at my old traders manual.
That's Nice, But It's NOT About The Technicals
The fundamentals of this stock is what I believe are the most important reasons to consider buying shares at the current pricing. Nothing has changed since last week, and there are even more reasons than before last week to own AT&T, or add to an existing position.
- The dividend yield is now at 4.80%.
- The ESS rating (also from Fidelity) has remained bullish and has been confirmed.
- According to the ESS analysts, there are no ratings under neutral. 7 neutral, 2 outperform, and 2 buy ratings.
Jefferson Research (NYSE:I) Jefferson Research (i) 96 96 Buy Buy Standard & Poor's Equity Research Standard & Poor's Equity Research (i) 76 76 Neutral Neutral Zacks Investment Research, Inc Zacks Investment Research, Inc (i) 69 69 Neutral Neutral Thomson Reuters/Verus Thomson Reuters/Verus (i) 68 68 Neutral Neutral Ford Equity Research Ford Equity Research (i) 62 62 Neutral Neutral Ativo Research Ativo Research (i) 55 55 Outperform Outperform Columbine Capital Services Inc. Columbine Capital Services Inc. (i) 39 39 Outperform Outperform GMI GMI (i) 20 20 Neutral Neutral EVA Dimensions EVA Dimensions (i) 19 19 Neutral Neutral Ned Davis Research Ned Davis Research (i) 3 3 Neutral Neutral Market Edge Market Edge (i) 1 1 Buy Buy
- The outstanding sales that have been recorded by AT&T on all smartphones thus far, as noted by Randall Stephenson, CEO of T, in this article;
"We're having record sales with iPhones, and across the board, the portfolio of all that the smartphone business is hot," Stephenson said."
- Insider buying has been very positive as noted in my last article. (Check it out)
"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."
- Finally, from the words of the CEO himself;
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.
My Bottom Line
It seems to me that the recent price dip could be a prelude for another 52 week high. I believe the stock is cheap right now.
I bought more shares yesterday and more today.
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.