AT&T (NYSE:T) is almost as reliable a pick as you can make, and as the market gets less predictable, AT&T stock ight be a safe haven.

The stock market has started 2019 in the same way it ended 2018: in a sell-off. The big drag was a rare and sizable guidance cut from the world’s leading technology company, Apple (NASDAQ:AAPL).

Before that, Tesla (NASDAQ:TSLA) reported fourth quarter delivery numbers which came up just shy of estimates. Alongside those reports, the ISM Manufacturing Index dropped sharply in December, weekly jobless claims have been rising sharply, and China economic data has continued to worsen.

Overall, it’s messy out there in markets. It projects to remain messy for the foreseeable future, too. That means it is time for investors to play defense. At this point in time, one particularly attractive defensive name is this telecommunications giant.

AT&T stock is a strong defensive pick for a few reasons.

First off, the company’s operations as a telecom giant are relatively stable and resilient to broader economic weakness. Second, AT&T has already dropped a whole bunch over the past few months. Third, the biggest risk (rising rates on a debt-loaded balance sheet) is backing off as the economy materially weakens. Fourth, the valuation is simply too attractive to ignore, and the huge yield provides plenty of downside protection.

All together, AT&T is a strong defensive pick in this volatile and messy market. As such, for investors looking to de-risk their portfolios, AT&T is a solid pick-up.

The Fundamentals Are Stable & Resilient

The main reason AT&T is attractive at the current moment has to do with the company’s recession resilient operations.

It is known far and wide that telecom giants tend to have stable revenues, profits, and cash flows during times of economic weakness. That is because, regardless of which way the economic winds shift, consumer demand for quasi-utility services like internet service, wireless coverage, and cable is a constant.

There is data to support this claim. During the financial crisis, from the first quarter of 2008 to the last quarter of 2008, S&P 500 earnings per share dropped from north of $16, to negative territory. That is a huge drop.

But on the telecom front, S&P 500 Communication Services earnings per share dropped from $2.11 to just $1.87 during that same time frame. In other words, while the broader market saw its entire earning base wiped out, telecom earnings fell just over 10%.

The same is true for AT&T. During the financial crisis, AT&T’s earnings weren’t affected at all. In fact, the company’s revenues and earnings per share actually rose in 2008, and were relatively stable in 2009.

As such, AT&T stock is supported by a business that is relatively stable and recession resilient. Inherently, that makes the stock an attractive defensive play here and now.

The Valuation Is Too Attractive to Ignore

Astute observers will point out that, despite AT&T’s earnings stability during the financial crisis, AT&T stock still got killed in 2008-09. It dropped about 45% off its highs, while the market tumbled 55%, but that sell-off despite operational stability can be attributed to valuation.

At its peak in 2007, AT&T stock was trading at nearly 20X trailing earnings. The dividend yield was around 3%, and the free cash flow yield was around 6%.

When the sell off finally ended in March 2009, AT&T was trading at 11X trailing earnings, with a 7% dividend yield and 9% free cash flow yield.

Today, the valuation on AT&T resembles its valuation in March 2009, when the stock bottomed after a big sell-off.

The trailing earnings multiple is around 6. The dividend yield is around 7%. And, the free cash flow yield is north of 10%.

Thus, what you have with AT&T stock is a company that projects to have stable earnings over the next several years, regardless of broader economic strength, and a stock that is already priced for the worst to happen.

In other words, AT&T is a defensive company with a defensive valuation. That is an attractive combination.

Moreover, the biggest risk for AT&T stock is rising rates, and that risk is subduing. The company has accumulated a ton of debt over the past several quarters. The higher rates go, the more that debt gets pressured.

In light of the recent slowdown in economic data, it looks quite likely that rates won’t go higher in the foreseeable future. As such, the biggest risk for AT&T stock is moving into the rear-view mirror.

Bottom Line on AT&T Stock

There’s a lot to like about AT&T here and now from a defensive standpoint. The company’s operations have historically proven to be recession resilient. The valuation is anemic and provides healthy downside protection. Plus, the stock’s biggest risks (higher rates) is growing smaller by the day.

All together, AT&T stock looks like a solid pick-up for any investor looking to play defense.

As of this writing, Luke Lango was long AAPL, TSLA, and T.