Accumulate AT&T Shares While No One Is Paying Attention

AT&T equity hasn't done much for months, offering little other than a big dividend. Trading volume is set to decline for the fourth straight week. Since reporting earnings in late January, investors appear to have largely forgotten the stock. Perhaps no one's paying attention? Often, that signals a good time to purchase shares.

Some analysts pan AT&T shares: stalled U.S. wireless growth, a dying wireline business, cutthroat competition, and sky-high capital spending. However, AT&T is embarking upon a strategy countering all of that. It's aggressive and ambitious. There's risks involved. But the potential outcome, if executed properly, could reward stockholders handsomely. Low AT&T share valuation augments the risk-reward attraction: an 18-month, $41 price target is defensible. A robust 5.5% dividend yield adds gloss; that payout is safe. Near-term, another catalyst is the high level of short activity on the shares; currently 8.8 days to cover, with a total of 5.9% of the shares outstanding shorted. Eventually, all shorts must cover.

Source: Seeking Alpha

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