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 2%. On the positive side, the stock maintains a high 7.4% annualized dividend yield in a very low interest rate environment. Should investors consider buying AT&T stock?
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Currently, the stock market is in an uptrend which means it’s a great time to identify top stock contenders for your portfolio and initiate new positions. Investors should seek out leading stocks in leading industry groups that are outperforming the market.
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 top seven stocks in the group, AT&T ranks fourth in terms of price performance so far this year. Shares are down roughly 2%. This indicates that the stock is trailing the leaders such as Lumen Technologies (LUMN) and IDT Corporation (IDT). 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 recently formed a new flat base with a 31.99 buy point. 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 recent base was a first stage — a bullish sign. Breakouts from first- or second-stage bases are more likely to work than those from later patterns. However, the breakout failed as shared couldn’t hold enough momentum to follow through on the breakout, which occurred on May 4.
On the negative side, AT&T stock currently maintains a very low Relative Strength Rating of only 16, 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 reported first-quarter earnings on Apr. 22. Earnings and revenue for the March-ended quarter beat Wall Street projections as the company added more wireless postpaid phone subscribers than expected. AT&T said it added 595,000 postpaid wireless phone customers vs. estimates for a 216,000 gain.
The firm’s first-quarter profit rose to 86 cents a share, up 2% from a year earlier. Revenue rose 3% to $43.9 billion, exceeding analysts’ estimates of $42.69 billion. A year earlier, AT&T earned 84 cents a share on revenue of $42.7 billion.
First quarter revenue at the company’s WarnerMedia division rose 9.8% to $8.5 billion as advertising at Turner Broadcasting rebounded.
The telecom said it added 2.7 million domestic subscribers for the HBO Max streaming video service in the first quarter. AT&T said it had 44.2 million HBO Max streaming subscribers as of March 31.
Analysts see 2021 EPS falling 1% for AT&T. But they estimate a 4% gain for 2022.
Is AT&T Stock A Buy?
AT&T stock should not be bought right now based on its fundamentals and technical analysis. 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 7.4% 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.
Follow Fox on Twitter at @foxonstocks for more commentary on the best stocks to buy and watch.
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