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Rare is the day that a Wall Street analyst -- or a financial planner for that matter -- will recommend buying and holding a stock for a decade, or even longer. The U.S. and international economic cycles, changing circumstances in a sector, operational changes in a company, and the continual change that characterizes the dawn of the globalization era, all point toward holding a stock for a considerably shorter period -- buying a stock, and then selling it at its short-term peak, however one would define that short-term period.
Still, in this space The Fly has outlined several rare exceptions, hopefully supported by enduring fundamental, macroeconomic, and technical data/reasons for maintaining the position long-term. The 3 members of that elite club described to-date: General Electric (NYSE:GE), Sears Holdings (NYSE:SHLD), and United Technologies (NYSE:UTX).
Well, add AT&T (NYSE:T) to that list.
AT&T has more than 70 million landlines, one of the biggest mobile phone systems in Cingular Wireless, an enormous geographical footprint, an emerging digital satellite TV service via Echostar's (NASDAQ:DISH) network, and, perhaps most overlooked, a broadband service.
The broadband service may turn out to be the most-overlooked revenue driver and the biggest catalyst for growth because demand for broadband (business, residential, governmental) is growing at double-digit rates -- and some are even predicting a "broadband shortage."
(Note: Technical analysis-agnostics stop reading here. Others, continue...)
Further, AT&T's stock chart is solid - and this is despite the Dow's 400-point sell-off about a week ago. AT&T has pulled back from its 52-week high around $38.30 to $36.55, where it closed Friday, but the overall 9-month chart pattern is constructive. The stock is slightly overbought, short-term, but most importantly: T has remained above the critical 50-day moving average. In addition, its P/E is elevated at 19, but still reasonable, given AT&T's projected revenue growth rate, which further confirms an overall healthy stock pattern.
In addition, when one adds a 4% yield stemming from a $1.33 annual dividend, the sum is a company with established businesses, a mix of old economy / new economy revenue streams, and catalysts for growth in a high-demand sector (broadband). In other words, a decidedly positive operational picture.
Hence, add AT&T to that rare list of long-term positions -- held a decade or longer. If you're looking for a 100-share stock that will help build that son or daughter's college fund, T gives strong indications of being a pretty good match for that mission.
(Note: Technical analysis-agnostics stop reading here. Others, continue...)
Further, AT&T's stock chart is solid - and this is despite the Dow's 400-point sell-off about a week ago. AT&T has pulled back from its 52-week high around $38.30 to $36.55, where it closed Friday, but the overall 9-month chart pattern is constructive. The stock is slightly overbought, short-term, but most importantly: T has remained above the critical 50-day moving average. In addition, its P/E is elevated at 19, but still reasonable, given AT&T's projected revenue growth rate, which further confirms an overall healthy stock pattern.
In addition, when one adds a 4% yield stemming from a $1.33 annual dividend, the sum is a company with established businesses, a mix of old economy / new economy revenue streams, and catalysts for growth in a high-demand sector (broadband). In other words, a decidedly positive operational picture.
Hence, add AT&T to that rare list of long-term positions -- held a decade or longer. If you're looking for a 100-share stock that will help build that son or daughter's college fund, T gives strong indications of being a pretty good match for that mission.
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Reader Comments (Page 1 of 1)
3-13-2007 @ 10:36AM
Doug said...
Yes at@t is a good stock. I have several hundred shares in my 401k ( along with oter things ) . I work for the company. I worked for it when it was SBC and when it was Ameritech. The stock lagged for many years. Finally it exploded for like a 30 plus percent rise last year.Yes things are looking rosy right now for all the reasons stated in the story.However, putting all your kids college money in a single stock , no matter how well it's doing now is foolhardy. ( Remember Enron , Worldcomm ? )
I'm not suggesting at@t is about to fall off a cliff. I'm saying a 529 plan invested in an aggressive mutual fund is by far the better way for college savings. That's what I'm doing.