AT&T's shares have meandered somewhat since the February Buy rating, but that in no way changes T's low-risk, decent-return-on-equity story.
Further, AT&T's successful iPhone providership has added more than two million customers – a major reason why wireless revenue growth should exceed 10% in both 2009 and 2010. The company's broadband division will also post modest revenue increases in 2009 and 2010. A sizable, dependable dividend also limits the downside risk.
Technically, AT&T's stock chart over the past nine months has been range-bound between $22 and $27. The stock will likely lag the economic recovery by three to six months, but a $40 target is seen, as the recovery gains steam in 2010. The First Call FY2009/FY2010 EPS estimates for T are $2.07 to $2.23.
Stock Analysis: AT&T is a low-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in T now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your T position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $18.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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