One of the biggest winners in October was AT&T (T): The stock gained more than 7% in the month as investors flocked to the company’s 5% dividend yield. They also got a stock that beat earnings estimates for the third quarter. That defense made sense in a month filled with fear.
Expect the opposite for the remainder of the year. From a valuation perspective, AT&T is simply unappealing. Analysts expect the company to grow profits by 8% in 2014. At current prices, shares trade for 15 times 2013 estimated earnings — that’s flat-out spooky. Investors have bid up the share price as they chased the yield, but look for AT&T to underperform the market for the rest of the year.