Based on the technical discount in telecommunications behemoth AT&T (NYSE:T), I pounced on the opportunity. In 2018, T stock shed nearly 23% of market value. On the other hand, rival Verizon Communications (NYSE:VZ) gained almost 11%. Just from that comparison, AT&T is the better deal.
But some of my InvestorPlace colleagues whom I’ve followed for years disagreed. Earlier this year, Will Ashworth warned readers not to chase the telecom’s high dividends. Admittedly, I did exactly that. Also, Vince Martin conducted a detailed analysis suggesting that the AT&T stock price is worth no more than $30.
Did I just miss the memo that everybody else received? I bought T stock for a number of reasons, including its leverage toward the 5G network, its massive resources, and yes, those dividends. At nearly 7%, it rivaled many other high-yielding stocks. The difference, of course, is that AT&T is no fly-by-night operation.
Still, I go back to the same question: am I missing something when analyzing the bear case for the AT&T stock price? When reading Ashworth’s, Martin’s, or most other critics’ work, I come across two overriding themes: sustainability and viability.
Ashworth largely focuses on the former. I’ve read enough of his work to realize that he prefers companies with clean balance sheets. But the debt load for T stock is anything but. Understandably, it worries him. And on a more practical note, huge debt typically impedes dividend payouts.
Martin also hates that liability figure. At the same time, he doesn’t see much of a growth engine. Therefore, buying AT&T stock seems risky, especially since management has made some costly acquisitions.
Nevertheless, T stock deserves another characterization: inevitability.
T Stock Is More Than an Investment
Whether you want to acknowledge it or not, we’re in a war. It’s unlike a traditional war with bullets and body counts. As a result, most folks don’t pay it much attention.
Broadly speaking, that’s a big mistake, although this miscue underlines my contrarian view on T stock. As we speak, our economic adversaries — namely China and Russia — are desperately seeking an edge in next-generation technologies. If we want free commerce to survive, the U.S. must do everything it can to get there first.
Worryingly, though, the international community is progressing while the Trump administration invests in yesteryear infrastructures like coal and aircraft carriers. For instance, China has an ambitious goal entitled “Made in China 2025.” The world’s second-largest economy seeks self-sufficiency in 10 technology sectors.
Russian President Vladimir Putin made waves almost two years ago when he stated that dominating artificial intelligence translates to dominating the world. Even our military acknowledges that tomorrow’s wars will not be kinetic, but digital.
In that context, AT&T stock absolutely cannot fail. As I argued last month, AT&T is a branch of the federal government. I’m not just referring to its gargantuan reach via its telecom networks. Rather, it obviously plays a critical role in the 5G rollout.
And 5G is really the backbone of all future technologies. Actualizing deep-learning protocols will require 5G’s unprecedented speeds. So too will AI platforms, particularly with automated-transportation networks.
Therefore, I respect but disagree with the sustainability or viability criticisms. Inevitably, our adversaries will throw everything they have to dominate tech. T stock cannot fail, which addresses the sustainability concerns. As far as viability, our tech firms are this century’s defense stocks.
And all our future innovations will eventually flow through and buoy the AT&T stock price.
AT&T Stock May Be Permanently Relevant
Now I’ll concede that my above argument appears melodramatic. However, I think that’s because we have a 20th-century mindset that believes warfare necessarily involves bloodshed. But a more devastating war is one that enslaves us economically.
In this respect, I think it’s helpful to consider T stock not as a telecom firm, but as what I said earlier — a government branch. All this talk about wireless subscribers and media content pales in comparison to AT&T’s core purpose: provide the platform for all future technologies at the consumer, commercial and governmental level.
Not only that, 5G may represent the ultimate rarity among technological concepts: peak capacity. Experts believe that if the rollout is properly implemented, 6G technology is unnecessary. There’s evidence for that bold claim, considering that 5G can serve seven billion people, or roughly 2,000% more than our current population.
In other words, AT&T stock may become permanently relevant. Honestly, if that doesn’t interest you in the telecom giant, nothing will.
As of this writing, Josh Enomoto is long T stock.