AT&T Shares Stuck in the $20 Range?
AT&T Inc. (NYSE:T) commands a massive $153.3 billion market cap and in 2010 its share price has been stuck trading between $24 and $28. With its shares now trading just 8.3% away from its 52-week low can it finally move into the $30 range?
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AT&T Inc (T) shares have traded between $23.78 and $28.73 over the past 12 months, the stock has done nothing for investors. AT&T Inc shares closed today at $25.94 and are now trading with a P/E Ratio of 12.1 and EPS of 2.14. On Monday (July 27th) Deutsche Bank went out on a limb and upgraded AT&T (T) to 'Buy' from 'Hold' and set a $31 target price. If you believe Deutsche is right it would imply that AT&T shares could gain 19.5% in the next 12 months. Why even care about this upgrade? It just happens to be the first upgrade for the company in more than a year.
Jim Cramer also named Verizon (NYSE:VZ) and AT&T (T) as its favorite telecom stocks on Monday (7/27) as both of them are "both doing very well."
What didn't go well for AT&T this week was the possibility that the S&P may cut the company's credit rating, then they also got slammed for spending $3.09 million in Q2 lobbying on Capital Hill. AT&T lobbied the federal government on legislation involving patent reform, radio spectrum, telemarketing, distracted driving, among others, according to a report filed on July 20th.
Last week AT&T reported a Q2 2010 profit of $4.02 billion, or 68 cents a share, up from $3.2 billion, or 54 cents, a year earlier, much to the success of new iPhone users. During the Q2 2010, 496,000 new subscribers signed up for AT&T contracts but that is compared to nearly 1.5 million new subscribers in the second quarter of 2009. The company's subscriber growth is slowing, thus investing in AT&T is almost as exciting as watching a slug move through the grass.
Buying shares of AT&T and hoping that Deutsche Bank is right one year from today is a very glass half full view, but the best thing about this stock is it trades slowly. AT&T is currently paying out a 42 cent dividend which works out to a 6.48% yield, not a bad fee to collect should you decide to take a risk on the communication giant's shares. However what happens when the iPhone starts to move to other carriers, will they switch or stay with AT&T?
It would be nice to pick up AT&T shares closer to $24 and enjoy a juicy dividend while the company does everything it can to lift its share price. Thanks to today's volatile stock market, we may all get that chance.
Disclaimer: No positions in any of the securities mentioned in this publication.