SBC: A "Preview" Pick from Mugarian

01/09/2004 12:00 am EST


John Mugarian

Editor, Investor Alert

John Mugarian is the editor of the soon-to-be-launched Investor Alert from Phillips Publishing, designed to help investors avoid pitfalls when dealing with brokers and brokerage firms. We look forward to his new letter and are thrilled to offer our readers a preview of his work.

"SBC Communications (SBC NYSE) is the second largest telephone company in the US. SBC is the combination of Southwestern Bell, Pacific Telesis, and Ameritech with 57 million phone lines in 13 states. In addition, SBC owns a 60% stake in Cingular Wireless. In 2001, the company traded in the $50s and is currently trading around $25. Left for dead and paying a 5% dividend, the company is back on the comeback trail.

"Recently, SBC announced plans to buy back 10% of its outstanding shares and raise the dividend by 10.6%. Share repurchases will reduce the number of outstanding shares, and raise earnings. Mexico's richest man, Carlos Slim Helu purchased five million shares in October 2003 at prices around $22/ share. The last time I saw Carlos Slim buy this aggressively, he was buying Phillip Morris at $19/ share. Mr. Slim is an SBC Director and has proven to be a very savvy investor. I am looking for a conservative 25% gain in SBC, and maybe more."

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