AT&T is one of the few large cap stocks in the S&P 500 that we view as decent fundamental value. It’s a 14 P/E with 7-8% earnings growth expected over the next 2 years, and pays a 5% dividend to boot. Its wireless business is in a secular sweet spot as smartphone data usage continues to soar.
But the stock just hasn’t been able to get off the mat over the past few months. Daily chart:
The 2 green circles denote the double top that formed in the stock in late 2012 / early 2013. Since then the stock has held the crucial 32-33 support area on multiple tests. Given AT&T’s relative weakness in an overall strong market, I expect that we’ll see another test of that important support in the coming months.
However, the stock’s fundamental strength combined with a very strong support area in the 32-33 area would make me interested on the long side if the stock did sell off that far. For now, this is a watch and see name as it battles to regain its mojo.