AT&T (t) is one of the most recognizable wireless phone providers in the US. The telecom and media conglomerate has had a better year so far than last year. AT&T shares fell more than 26% in 2020, even after recovering nearly 30% from the lows of the coronavirus bear market. So far, the share has fallen by 4% in 2021. On a positive note, the stock maintains a high annualized dividend yield of 7.5% in a very low interest rate environment. In addition, telecom stocks are sometimes seen as a safe haven when stock markets become volatile. Should Investors Consider Buying AT&T Shares?
Currently, the stock market is in an uptrend, meaning it’s a great time to identify the best stock candidates for your portfolio and start taking new positions. Investors should look for leading stocks in leading industry groups that outperform the market.
Now the question is, do AT&T stocks deserve a spot in your portfolio or on your watchlist? Let’s look at AT&T from a CAN SLIM perspective.
Is AT&T Stock a Leader or a Lag?
According to IBD stock controlAT&T shares rank 5th in terms of Composite Rating within the telecom services industry group. Of the top seven stocks in the group, AT&T ranks fourth this year in price performance. The stock is about 4% lower. Given its position relative to its competitors, it is safe to say that AT&T is not a leading stock.
AT&T technical analysis
AT&T shares had formed a new flat base between January and May of this year with a buy point of 31.99. But the breakout failed in late May as the heavy volume stock fell below the 50-day mark. Shares of AT&T have also fallen below their 200-day moving average since then.
The recent base has been a phase one – a bullish sign. Outbreaks of bases in the first or second phase are more likely to work than those of later patterns. However, the breakout failed as shared was unable to maintain enough momentum to continue with the breakout, which occurred on May 4.
Also on the negative side, AT&T stock currently maintains a very low relative strength of just 20, which is well below the minimum of 80 for ideal growth stock contenders.
With the RS line showing a downward trend in recent weeks, AT&T stock is showing serious weakness from a relative strength perspective. The RS line measures a stock’s performance against the S&P 500. Ideally, an RS line should be at or near a new high when a stock breaks out.
AT&T stock by numbers and ratings
AT&T, which agreed in May to merge its WarnerMedia business with Discovery (DISC), reported earnings on July 22. Earnings and earnings for the quarter ended June beat Wall Street projections as the company added more wireless postpaid phone subscribers than expected. AT&T said it added 789,000 wireless phone postpaid customers versus estimates for a gain of 287,000.
The company’s quarterly earnings rose to 89 cents a share, up 7% from a year earlier. Revenue rose 8% to $44 billion, surpassing analyst estimates. A year earlier, AT&T made 83 cents a share on $40 billion in revenue.
Wireless service revenues grew 5% to $14.3 billion, surpassing estimates of $14.1 billion. Meanwhile, the company’s WarnerMedia division revenue grew nearly 31% to $8.8 billion from a year earlier.
“For now, AT&T is doing its best to make hay while the sun is shining,” said Craig Moffett, an analyst at Moffett Nathanson. “They are pulling out all the stops to generate unit growth, even if that means rather moderate growth in EBITDA. Their promotion has seen their subscriber base grow at a lightning pace, and with the additional boost of 30% revenue growth from WarnerMedia as a segment, it is bouncing back of Covid, they see their fastest revenue growth in memory.”
The telecom said it added 2.8 million HBO and HBO Max streaming video subscribers this quarter. AT&T also said it had 47 million subscribers, almost 11 million subscribers more than a year earlier.
Analysts see AT&T earnings per share up 3% in 2021, which is positive. But they estimate a loss of 3% for 2022.
Is AT&T Stock a sale?
AT&T stock should not be bought at this point based on the technical analysis, as it is nowhere near new buying territory and trades below the major moving averages. In addition, despite the company’s positive growth in wireless subscribers and revenue, investors are looking to prioritize stocks that have seen at least 25% growth in revenue and sales in recent quarters. T-shares are currently well below that level.
Despite its 7.5% dividend yield, AT&T stocks aren’t something you can add to your portfolio right now based on under-price performance. Investors will have to wait for the stock to form a better chart pattern and fundamentally regain strength. Investors can view IBD stock lists and other IBD content to find the best stocks to buy or watch.
Follow Fox on Twitter at @foxonstocks for more commentary on the best stocks to buy and watch.
You may also like:
Check out the best stocks to buy and watch
View Breakout Stocks and Technical Analysis
Time to sell Microsoft stock or keep this leader in the long run?