Summary
- From the perspective of asset mispricing and appreciation opportunity, AT&T may not be a high-conviction call. But I invite readers to look at the stock differently.
- As a dividend play, I see much more benefit than the risk of holding T, assuming risks are spread out across many different assets.
- As a growth "assistant", T can conceivably continue to serve as a diversification tool, helping to lower portfolio risk.
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My list of investment pet peeves is long. Near the top is the idea that, to successfully invest in a stock, it must ultimately prove to be mispriced relative to the company's fundamentals. A close cousin to this approach is the "high conviction call": i.e. buy stock XYZ now because it will be worth more in six to twelve months - as if anyone knew with much precision what will happen to stock prices in the foreseeable future.
Were I to think only in terms of mispricing and appreciation opportunity, I would probably not consider AT&T (T) a good stock to own. The company is heavily indebted, growth prospects have fallen short of exciting, and enough of the carrier's businesses have not been thriving.
Credit: company's website
However, T is a unique stock whose characteristics are valuable inside diversified portfolios, both growth and income-producing alike. In this article, I will explain why I believe T to be grossly underappreciated by looking at the stock from a portfolio strategy perspective.
