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AT&T Stock Is Strong Compared to Its Peers

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AT&T (T) stock hit a new 52-week high of $35.4 on Monday. The stock continues to look strong on multiple fronts.

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AT&T stock looks strong

According to Goldman Sachs, investors should look for opportunities in dividend stocks. The benchmark Treasury yields are at record lows, according to CNBC. AT&T is one name in Goldman Sachs’ dividend growth basket. AT&T is trading at a dividend yield of 6%, which is notably higher than broader markets’ yield of 1.9%. Also, the company has increased dividends for 35 consecutive years.

Chart indicators

AT&T stock is trading 2% and 3% above its 50-day and 200-day moving average levels, respectively. The fair premium to both the support levels indicates strength in the stock. AT&T’s 14-day RSI (relative strength index) was close to 70 on Monday. The RSI indicates that the stock is close to overbought levels.

So far, AT&T stock has risen more than 22% this year, while the S&P 500 has risen about 16%. T-Mobile (TMUS) has risen about 22%, respectively, during the same period.

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Institutional ownership in AT&T

According to a recent 13F filing, the Vanguard Group was the biggest institutional owner in AT&T. The Vanguard Group held 7.7% at the end of the second quarter. The company added net 6.7 million shares during the second quarter.

Dodge and Cox and JP Morgan Asset Management were some of the biggest sellers. They sold approximately 19 million and 17 million net shares of AT&T during the second quarter.

AT&T stock’s valuation

Currently, AT&T stock is trading close to 10x its estimated earnings for the next 12 months. The level indicates a large discount compared to its historical average valuation of 17x. The stock appears inexpensive compared to the broader markets, which are valued at around 17x. T-Mobile stock is also trading at 17x its forward earnings.

T-Mobile stock continued to sway due to its impending merger with Sprint (S). To learn more, read T-Mobile and Sprint’s Deal in Peril despite FCC Chair’s OK.

Analysts’ recommendations

Analysts are still cautious on AT&T stock. Among the 28 analysts tracking AT&T, 12 recommended a “hold,” seven recommended a “strong buy,” eight recommended a “buy,” and one recommended a “sell” as of Tuesday.

AT&T stock has a mean target price of $34.5, which indicates a downside of more than 2% for the next 12 months.

In comparison, T-Mobile stock has a mean target price of $88.8, which implies a potential upside of 13.5%. Currently, the stock is trading at $78.2.

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