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Is AT&T Inc. Finishing A Correction Ahead Of More Upside?

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Is AT&T Inc. Finishing A Correction Ahead Of More Upside?
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Shares of AT&T, Inc. are correcting lower after a nice rally earlier this year. Will the bulls be able to hold their ground at “correction support” just above $34?

AT&T, Inc. (NYSE: T) shareholders have been very appreciative of the 5.2 percent dividend yield, as there has been a lack of capital appreciation because of share price movements ever since late 2012.

Does the company have the internal growth initiatives to keep the stock from becoming a range-bound play thing for traders?

Related Link: Verizon Under Pressure And Nearing Key Technical Support

What The Bulls See In AT&T…

Aside from the very attractive 5.2 percent dividend yield, those bullish of AT&T stock love the following aspects of the overall story:

The Company's Valuation Is Attractive By Several Measures:

  • The company has $11.3 billion in cash reserves and more than $12 billion in annual positive levered free cash flows, which are generated from the company's 13.75 percent net profit margins.
  • The price-to-book is 1.96
  • The price-to-sales is 1.38
  • The enterprise value is $253.2 billion while the market capitalization is only $179.64 billion
  • The stock's chart is still bullish right now and will remain so as long as $34 holds as support

What The Bears Point Out About AT&T…

The bearish contingent in AT&T obviously goes right away for the minuscule estimated growth in revenues and earnings for 2015, which come in at 2.3 percent and 4.6 percent, respectively. However, in addition to that, they point out the company's fairly high debt load (based on the debt-to-equity ratio of almost 100 percent) and the laggy nature of T's price chart. Any time you have a roaring bull market and your stock is failing to keep up, it should raise some yellow flags.

Technically Speaking…

Technicians are calling for a test of support at $34 but then believe that AT&T stock will commence another rally from there. The upside target they are giving for that rally is the April 26 peak at $39. Any close below $34 will likely lead to a downside test of the long-term uptrend line at around $31.80 - $32.

Related Link: Netflix Maintaining Its Technical Leadership Position As The Market Corrects

Overall…

AT&T looks like an interesting long-side trade candidate near the $34 support level and a very interesting long-term hold candidate with its 5.2 percent dividend yield. As always, choosing your entry points on the long side is the key to success with either the trade or the investment perspective of the AT&T stock situation.

Stock chart: 
Stock chart

Posted-In: Long Ideas Dividends Technicals Movers Trading Ideas Best of Benzinga

 

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