AT&T (T) is one of the most recognizable wireless phone carriers in the U.S. The telecom and media conglomerate has been having a better year so far than it did last year. AT&T stock was down over 26% in 2020, even after recovering nearly 30% from its lows of the coronavirus bear market. So far in 2021, share have traded down 15%. On the positive side, the stock maintains a high 8.5% annualized dividend yield in a very low interest rate environment. Additionally, telecom stocks are sometimes viewed as a safe haven when stock markets turn volatile. Should investors consider buying AT&T stock?
Currently, the stock market is in an uptrend under pressure which means it’s a great time to identify top stock contenders for your portfolio. Investors should seek out leading stocks in leading industry groups that are outperforming the market. Investors should note that AT&T can be viewed as a defensive play because of its high dividends.
Now the question is, does AT&T stock 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 Laggard?
According to IBD Stock Checkup, AT&T stock ranks No. 6 in terms of Composite Rating within the telecom services industry group. Of the stocks in the group, AT&T ranks second to last in terms of price performance this year. Shares are down roughly 15%. Given its position relative to its peers, it’s safe to say that AT&T is not a leading stock.
AT&T Technical Analysis
AT&T stock has had a rough second half of 2021. Shares attempted to breakout from a flat base with a 31.99 buy point earlier this year. But the breakout failed in late May when share gapped below the 50-day line in heavy volume. Shares of AT&T have since fallen below their 200-day moving average as well.
The stock’s been drifting lower over the past several months, and may have finally reached on bottom on Dec. 15. Shares hit a low of 22.02 and have since moved sharply higher. AT&T stock is attempting to reclaim its 50-day line, which remains below the 200-day moving average.
AT&T stock maintains a very low Relative Strength Rating of only 24, which is well below the minimum of 80 for ideal growth stock contenders.
With the RS line trending lower 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 The Numbers And Ratings
AT&T, which in May agreed to merge its WarnerMedia business with Discovery (DISCA), reported earnings on Oct. 21. Earnings for the September-ended quarter came in ahead of Wall Street projections as the company added more wireless postpaid phone subscribers than expected.
The firm added 1.2 million postpaid subscribers in Q3, beating estimates of 688,000 added subscribers. AT&T has racked up a total of 4.4 million wireless postpaid subscribers over the past four quarters.
AT&T’s recent promotional efforts were a big factor in boosting subscriber additions. The wireless provider ran a promotion offering subsidies of up to $1,000 for new and existing customers buying a new Apple (AAPL) iPhone.
Is AT&T Stock A Buy?
AT&T stock should not be bought right now based on its technical analysis since its nowhere near a new buy area and is trading below key moving averages. Also, despite the firm’s positive growth in wireless subscribers and earnings, investors want to prioritize stocks that have seen growth of at least 25% in earnings and sales in recent quarters. T stock currently falls far below that.
Despite its 8.4% dividend yield, AT&T stock is not one to be added to your portfolio right now based on substandard price performance. Investors will need to wait for the stock to form a better chart pattern and regain strength fundamentally. Investors can check IBD stock lists and other IBD content to find the best stocks to buy or watch.
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