What to look for in 2011: Positive Outlook
AT T; is currently rated as a buy or a hold in virtually all market research reports. Is that a good reason to buy? Actually, it is definitely not a bad reason. The best reason, however, can be outlined by the numbers.
We all know that the market has been up and down ever so sporadically since September 11th, 2001. The stock market scares us. Right? Well, there’s really nothing to be scared of if you invest properly. Look at the companies and industries like this; What’s hot and what’s here to stay. Telecom is one. And unless you’ve been hibernating for the last eight years, you know that there are two giants (Verizon and AT T;) and a handful of non-threatening minions (US Cellular, Sprint, Cricket and T Mobile).
Sure AT T; lost the exclusivity of the selling the iPhone, however, new Verizon customers are expected to encounter a significant amount of issues with the phone due to its flaws and bugs.
When buying a stock in telecom don’t think of it as in “Verizon has the best coverage area in the nation” or “Sprint has cheaper call plans”. Take out the sentimental part and look at the numbers. First off, telecom is booming and here to stay. Pretty soon five year olds will have their own Blackberry’s or iPhones. (God I hope not.) The real point is that the big two, AT T; and Verizon are giants among ants.
Now, AT T; shows a little more than $20 billion more revenue than Verizon annually. Not too shabby. On top of that, it is estimated that Verizon’s end of 2010 reports will show a slight decrease in revenue from 2009 while AT T; shows a slight increase. (See Schwab Equity Ratings Report)
All we know about the telecom world is what common sense will tell us: That data streaming and cell phone plans are the new necessity in today’s world. And standing atop the mountain are the two strongest companies: AT T; and Verizon.
What to expect out of owning shares of AT T;?
Future earnings, safe investments, dividend appreciation.
Price Today: $28.43
Price One Year Ago: $25.12
3 yrs ago: $36.11
Since mid nineties stock has never fallen below $20. High of $42.44
Stock has shown consistency to balance between $25 – $40 per share.
12 month target price (estimated) $33.00
Summary of facts:
If the balance between $25 and $42 is true, then the current price of $28.43 is a bargain. AT T; shows more potential to rise based off of historic performance than it does to drop. Sure the market will fluctuate, but the bonus of all this is the dividend. AT T; currently pays a dividend of $0.43 per quarter. For those that don’t know what that means, AT T; will pay you forty-three cents per share four times per year. If you own 100 shares, that basically means $43 dollars per quarter and $172 dollars per year. Another bonus for those interested in the dividends is that AT T; has shown an annual increase in dividend payouts year in and year out. So we should expect a slight increase in those dividends in the form of $0.05-0.18 per share over the next two years.
If $10K Invested 5 Yrs Ago would be worth
Expected growth of 100 shares:
Price at purchase: $2,843
Estimated/ Potential growth in 1 yrs: $3,465 or potentially more.
The Ultimate Verdict:
Buy this stock and expect to hold this stock as a long term investment. Investing in stocks is just like in Immobilien investieren. There are factors you have to consider first and you have to keep the target seriously. Of course, your goal is to earn profit, hence, you should look for ways on how you can achieve it. Do not freak out when market goes down a little because the market will go down here and there. If you see the stock peak over $39 dollars per share place a sell stop at $38.75 and hope the stock continues to rise. Re-invest dividends in the stock.