AT&T Rings up Growth

10/27/2015 8:00 am EST

Focus: STOCKS

Ari Charney

Analyst and Associate Editor, Canadian Edge and Personal Finance

With a market cap of around $200 billion and more than 100 million customers, our latest featured Growth Stock Spotlight offers businesses as wide-ranging as telephone, broadband Internet, and satellite TV, explains Ari Charney, editor of Utility Forecaster.

Few companies boast the scale and diversity of operations as AT&T (T). Its recent acquisition of DirecTV gives the No. 2 US wireless company an important foothold in Latin America, where the satellite TV provider has 18 million subscribers.

Latin America is one of the largest buyers of Spanish-dubbed TV series and movies from the US, the UK, and Australia.

Only 40% of households in Latin America subscribe to paid-television services (versus 90% in the US) and the Latin American middle class is DirecTV’s fastest-growing demographic.

At the same time, Latin American markets could see challenges as incomes decline on currency devaluations.

But we believe AT&T’s strong domestic presence gives the firm the platform necessary to make significant inroads into new markets at a time when potential competitors are weak and that will pay off when growth returns.

Meanwhile, the tech revolution is bigger than just telecom. Companies such as AT&T are at the forefront of developing new business opportunities for global firms, as rising smartphone adoption creates gateways to selling other products and services.

In recent weeks, AT&T’s stock has fallen somewhat harder than both its telecom peers and the broad market. That’s despite the fact that analyst sentiment has held steady.

But this gives income investors an opportunity to lock in a yield of 5.8%, the stock’s highest yield in more than three years. AT&T is a buy below $35.

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