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AT&T: The End Is Near

Jul. 11, 2017 8:00 AM ETAT&T Inc. (T)TWX, VZ195 Comments


  • It is hard not to get concerned ads a shareholder when you see one of your largest positions getting hammered day after day.
  • That is the way I feel about my AT&T position right now. The stock is basically a falling knife at this point.
  • Furthermore, there could be more pain ahead as the company is on the midst of a major spending spree just as the wireless wars heat up.
  • In thefollowing piece we take a closer look at what lies ahead for the company andthe stock for concerned dividend growth and income investors.

No pain, no gain

This was a phrase frequently used by my drill instructor during my time in Army boot camp. The meaning of the phrase is suffering is necessary in order to achieve something great. That is the way I feel about my investment in AT&T (NYSE: NYSE:T) right now. The stock has now officially entered falling knife status.

Current Chart

Source: finviz.com

This reminds me of a famous contrarian quote by Seth Klarman:

“Generally, the greater the stigma or revulsion, the better the bargain.”

At present, AT&T’s stock is unloved and under-owned. The stock has broken through major support at the $38 and is within a few percentage points of its 52 week low. Even so, the question remains… Does AT&T’s stock represent a value trade or trap?

Value Trade Vs. Trap

You have to buy low to sell high and AT&T is down significantly. The question is… Does the selloff in AT&T shares represent a value trade or trap? A value trap is a stock that appears to be a bargain based on fundamentals but has no future catalyst for recovery.

The stock traps investors when they buy into the company at low prices and the stock never improves. Sometimes stocks are down for good reason. Sector, industry or company specific headwinds may be so strong and prevalent the company may never recover. In the following sections we will perform a review of AT&T’s current state of affairs to determine if the stock is a value trade or trap. We will first review the current fundamentals.

Fundamental Review

Earnings per Share

The earnings per share (EPS) of a company is conceivably the most important statistic to understand before investing in a company’s stock. Each and every time you consider starting a position in a stock, you should prudently

This article was written by

David Alton Clark profile picture
The #1 Service for Income Coupled With Growth Targeting 20% Total Return
I have been a Seeking Alpha Contributor for over a decade. I became a CNBC Contributor in 2015 for having the #1 track record according to stock pick returns. I was also featured in BARRON'S for being the Top Performing Financial Expert according to TipRanks from 2010-15. In 2020, I was named "Blogger of the Decade" on Yahoo Finance for having the best stock picking track record from 2010 to 2020. In addition, I am a currently a licensed REALTOR® in the state of Texas, a former FINRA registered OIl & Gas securities representative, banking industry executive with Citibank, and auditor with EY, a major accounting firm. I received my BBA in Accounting (With Honors) from the University of Texas - San Antonio. 

I am a self-made man and started out my career in the US Army's 10th Mountain Division as a Mountain Infantryman. I am a member of the DAV and a Disabled Veteran. I  have managed my own portfolio for the past 30 years. This includes successfully navigating the 2000 and 2008 bubbles, so I completely understand the full cycle the market can take. People who know me in investing circles call me the "Bubble Surfer" for my ability to preserve capital during times of duress. My professional background has provided me with an intimate knowledge of corporate financial statements and how companies actually make money. This expertise and wisdom is the value I wish to share with you. Here is a profile of me featured in the Globe and Mail detailing my career.

DISCLAIMER: David Alton Clark is not a Registered Investment Advisor or Financial Planner. The Information in his articles and his comments on SeekingAlpha.com or elsewhere to be used as a starting point for your own due diligence. Do your own research and always consult a registered investment Advisor.

Analyst’s Disclosure: I am/we are 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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