Summary
- My previous article on AT&T rated the article a "Buy" with an expectation that the stock would appreciate in value both short term and long term.
- The stock is now up almost 8% including dividends paid out in less than 2 months.
- Despite this short-term appreciation, I believe it still isn't a bad time to get in on AT&T if you believe in the long-term ability of the company.
two months ago, I wrote the article "Why You Should Consider Investing In AT&T Today" where I argued for the telecommunications giant AT&T (T), a company which I consider to be of such quality that it forms the backbone of my international telecommunications holdings. The company has an impressive yield, even now that a macro-related surge in the stock price has sort of materialized.
In this article, I'll show you why from a fundamental valuation perspective, the stock is still very much investable, and why you could consider buying it in this market.
Let's get going.
AT&T - growth in 2 months
As I said, the valuation since the publication of my last article has changed. In doing so, it has also become less appealing to buy the stock based on fundamental metrics. The company has returned 7.96% since the 11th of June including company dividends.
What has happened to cause this rise, beyond overall SPY development? Well, a few things.
- Some players, including Credit Suisse (NYSE:CS), view AT&T's negatives as past and have boosted the company's rating. As a Seeking Alpha author and an overall long-focused dividend investor, I follow the author trend here in relation to the overall market, where SA authors overall are bullish (with 2 bearish contributors over the past 30 days).
- The company reported an excellent 2Q19, complete with a raising of guidance for FY19 and a perceived bottoming of DIRECTV losses.
- Things have become far clearer regarding the DISH (DISH)/Sprint (S) /T-Mobile (TMUS) situation, which has impacted telecommunications positivelyoverall.
Bulls and bears have, as they always tend to be, been very split on the long-term expectations on this stock, varying between complete oblivion or endless profits and upside.
Me, I'm somewhere in between. I believe the long-term challenges of the company's streaming plans - and streaming businesses in general - are going to be more than any company believes them to be. That is why I don't like investing in companies who rely on streaming as their main source of revenue and/or profit (if any).
AT&T does not - their legacy and wireless business are what brings in the cash, even if the margins in new business areas, strictly speaking, are better than legacy. However, when I invest in telecommunications, I demand this sort of extensive foundational business which to me represents a significant moat in comparison to new strictly-streaming players on the market.
AT&T does not need to succeed with its streaming plans during year one, or even year three. They have the time, and resources to try and fail - or rather, try and improve.
Other companies in the space don't have the same freedom - especially not if rates turn around.
Let's take a look at just what 2Q19 brought us.
