Investors seem way too enamored of this "value" telecom name
The financials, "fundamentals," and technicals for AT&T (NYSE:T) come down to -- Good: 6.6% dividend yield. Bad: Crushing $185 billion debt load, shares that peaked (without subsequently looking back) in 1999, and a business that has piled one costly acquisition on top of another and still cannot grow. Ugly: The accompanying chart (which may just be the ugliest we've ever encountered for a company with a market cap north of $200 billion... or $100 billion, for that matter).
And yet... Three analyst upgrades since October? And message board after message board packed with everyday investors so enamored of this "value" name that they buy every pullback? (The "message board topper"? In our view, the hopelessly smitten fellow who referred to T shares -- in 100% unironic fashion -- as "a monster"!)
Please check out the breadth and depth of the overhead price resistance as displayed on the accompanying chart (and labeled "BDR"). And just to ice the cake on the limited upside, we have what has been an impenetrable 200-day moving average atop those levels.
Our recommended put option is available on the cheap, despite the high level of overall market volatility. In fact, our targeted 100% profit over the recommended holding period could be achieved on a decline by T to just north of $27 -- at which point the shares will still be clinging to a $200 billion market valuation.
Subscribers to Schaeffer's Weekend Player options recommendation service received this T commentary on Sunday, December 16, along with a detailed options trade recommendation -- including complete entry and exit parameters -- straight from Bernie's trading desk. Learn more about why Weekend Player is one of our most popular options trading services.