As we have noted in the past, despite the recent rally in the markets, all the indexes remain down for the year, and the persistent selling that started right when 2016 did has knocked some growth stocks into the value category. This is the best of both worlds for investors. When growth is put on sale as value, not only is there solid upside potential, but the downside is also limited due to the harsh selling.
In the weekly research report from Jefferies with the firm’s top value picks to buy, three big cap companies stand out, as they are all industry leaders, they are all very cheap on a relative basis and they all pay outstanding dividends for investors. Needless to say, all are also rated Buy at Jefferies.
This company will continue to serve customers regardless of where the market trades. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV. It has TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.
With shares trading at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic, but increased device financing plans as well.
The company announced recently that it is working with Salesforce.com to connect Internet of Things data from AT&T’s solutions into Salesforce’s Customer Success Platform. By connecting AT&T M2X into Salesforce’s Service Cloud, companies can automatically create and route service requests, cases or tickets through pre-built workflows.
While AT&T’s fourth-quarter earnings were in line with forecasts, and slightly below the Wall Street estimates, a change in accounting for the entertainment group lowered revenue/EBITDA by $300 million for the quarter. The analysts note that this knocked three cents off the bottom-line numbers. So, all in all, a solid quarter, and another reason for conservative accounts to own the stock, especially with solid DirecTV additions, and mid-single-digit earnings growth estimated for 2016.
AT&T investors are paid a huge 5.14% dividend. The Jefferies price target for the stock is $40, and the Thomson/First Call consensus target is $37.63. Shares closed Tuesday at $337.39 apiece.