The Economic Recovery Didn’t Forget AT&T — It Will Just Be a Year Late

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It’s a call that widows, orphans and apes aren’t likely to connect with. I’m referring to AT&T (NYSE:T) shares. But today and for other investors, it’s worth considering T stock.

Image of AT&T (T stock) logo on a gray storefront.

Source: Jonathan Weiss/Shutterstock

Remember that Covid-19 bottom way back in March 2020 when Wall Street was pricing in a zombie apocalypse? Who could forget, right?

Today, though, the pandemic’s wrath has more or less (emphasis on the latter) long since been dismissed by the stock market and barometers like the Dow Jones.

Sure, back in November as omicron entered investors’ vernacular, the Dow staged a bearish hissy fit. But that lasted less than a month and a haircut barely trimming 5% off the index.

And buyers are right back at it in December.

Today, the venerable blue-chip index has nearly doubled from its Covid-19 bottom. And now in the back-half of the final month of 2021, the Dow is up 17% on the year and once again flirting with record highs for the umpteenth time.

But the gift that seemingly keeps on giving hasn’t helped former Dow constituent T stock. Year to date, T shares remained mired in red by almost 18%.

And mind you, T’s woes are despite a whopper of an annualized dividend now north of 9% that’s failed to properly compensate any of the embattled telecom’s remaining widows and orphans.

To say T stock has been an income trap is an understatement to say the least. Still, there are reasons to see AT&T’s naughty behavior as turning much nicer for its investors in the New Year.

As InvestorPlace’s Faisal Humayun recently noted, T’s pending spin-off of Warner Media is a positive catalyst for AT&T to refocus as a pure play telecommunications play, move past prior management missteps and begin tackling debt.

Moreover, with AT&T’s substantial wireless and network investments and growing 5G business, the outfit is in strong position to provide robust free cash flow and growing margins in the coming years.

Also, all the worries surrounding and now priced into T stock have made shares a relative and absolute bargain.

And while the sum of all those parts may not form a memorable jingle, along with a price chart of some notoriety, it’s time to “reach out and touch some…T stock.”

T Stock Monthly Price Chart

AT&T (T) monthly double-bottom relative to 2018 with Covid bottom being collateral, but maybe necessary damage
Source: Charts by TradingView

It’s true AT&T’s “re-sizing” of its dividend payout ratio next year will offer income-driven investors less of a reason to care. But today, that just draws attention away from where the real focus should be on.

Technically, T stock now owns a rarer and unwanted distinction of having retraced its entire rally off its March 2020 Covid-19 bottom.

Today, shares are sporting market-bucking gains of around 7% and on no news as far as I can determine.

The bottom line is that given what’s been discussed and eyeing the extended monthly view of AT&T’s price chart, that’s not to say the rally in T stock is all that mysterious.

On the date of publication, Chris Tyler does not hold (either directly or indirectly) positions in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.

The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2021/12/the-economic-recovery-didnt-forget-att-it-will-just-be-a-year-late/.

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