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Buy AT&T and 4 Other Value Stocks with Attractive Yields
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Value investing simply means buying the shares of companies with low stock valuations compared with similar companies or the market as a whole. In other words, it means investing in those stocks whose market value is less than its “fundamental value” or “intrinsic value” based upon an individual’s investment horizon.
Value investing has always been a very popular strategy, and for a good reason. After all, who doesn’t want to find stocks that have low valuation ratios (P/E, P/S, P/B) a solid outlook, and attractive dividends? However, identifying an undervalued stock is not an easy task. In fact, it is even more difficult to zero in on one that offers great value but is trading cheap at the moment. An investor needs to use the right tools and metrics to select such stocks which are currently trading below their true value or potential value and to invest in those stocks before they’re discovered by the market.
Market Recovers from Turmoil
Over the last couple of weeks, the markets have been volatile due to the U.K.’s referendum to leave the 28-nation economic bloc and mixed U.S. economic data. However, it seems that the general consensus of a prolonged period of market volatility post Brexit seems to have been overdone as the markets have sprung into life.
The Brexit vote on Jun 24 sent shock waves through the global financial markets, confirming the worst fears of market watchers and industry experts. However, investors it seems have downplayed Brexit-related fears as reflected in the recent stock market rally as the benchmark S&P 500 index was up 1.45% in the first five trading days of July. On Friday, the S&P 500 closed at record high (2129.90) sparked by the robust June jobs report.
Value Investing
The market turmoil in the last couple of weeks has made several stocks attractive for value investing, especially when they are supported by a good Zacks Rank. Our Zacks Rank system is a timeliness indicator, meaning that value investors can use it to identify precisely when a company's prospects are beginning to improve. Stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) are the ones to look out for. Moreover, stocks rated ‘A’ or ‘B’ through our Value Score System are likely to outperform based on their valuation measures.
AT&T Inc. – Offers Significant Value
This U.S. telecom behemoth AT&T Inc. (T - Free Report) currently carries a Zacks Rank #2 along with a value style score “B.” The current valuation of AT&T looks promising. The company has a current forward P/E multiple of 14.9 and P/B multiple of 2.1 (a P/E ratio below 15.0 and a P/B ratio under 3.0 generally indicates value). These multiples are below the peer group averages. Furthermore, AT&T currently has a dividend yield of 4.51% compared with the industry average of 3.24%.
AT&T's combo-offer of fiber-based U-verse TV and Internet service, newly acquired DIRECTV’s satellite TV and GigaPower Internet service can now provide traditional cable video as well as mobile video streaming services.
The company is also moving full steam ahead with its objective to roll out ultra-high-speed Internet service across the country. Moreover, plans to offer three Internet TV packs for different categories of viewers bode well. Also, the field test of the next-gen 5G wireless technology, initiatives in the IoT space and investments in the Mexican telecom market and fiber arena build optimism.
Other Top Picks
In addition to AT&T, we offer 4 more stocks with Zacks Rank #1 and a value style score “A.”.
NGL Energy Partners LP (NGL - Free Report) : The company is a limited partnership operating a vertically-integrated propane business with three operating segments: retail propane; wholesale supply and marketing; and midstream. NGL Energy has a current P/E of 16.2x, P/B of 1.1x and P/S of 0.2x. Its current dividend yield is 8.40%.
Sotherly Hotels Inc. (SOHO - Free Report) : The company is a real estate investment trust. It is focused on the acquisition, renovation and upbranding and repositioning of upscale to upper upscale full-service hotels in the U.S. Sotherly Hotels has encouraging valuation metrics such as 4.5x P/E, 1.6x P/B and 0.6x P/S. The company currently has a dividend yield of 6.33%.
Just Energy Group Inc. : The company is engaged in the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy Group has a current P/E of 19.6x and P/S of 0.4x. Its current dividend yield is 6.28%.
Braskem S.A. (BAK - Free Report) : The company figures as the largest petrochemical operation in Latin America and among the five largest private companies in Brazil. Braskem also has highly significant valuation metrics such as 4.8x P/E, 4.8x P/B and 0.3x P/S. The company currently has a dividend yield of 6.02%.
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Buy AT&T and 4 Other Value Stocks with Attractive Yields
Value investing simply means buying the shares of companies with low stock valuations compared with similar companies or the market as a whole. In other words, it means investing in those stocks whose market value is less than its “fundamental value” or “intrinsic value” based upon an individual’s investment horizon.
Value investing has always been a very popular strategy, and for a good reason. After all, who doesn’t want to find stocks that have low valuation ratios (P/E, P/S, P/B) a solid outlook, and attractive dividends? However, identifying an undervalued stock is not an easy task. In fact, it is even more difficult to zero in on one that offers great value but is trading cheap at the moment. An investor needs to use the right tools and metrics to select such stocks which are currently trading below their true value or potential value and to invest in those stocks before they’re discovered by the market.
Market Recovers from Turmoil
Over the last couple of weeks, the markets have been volatile due to the U.K.’s referendum to leave the 28-nation economic bloc and mixed U.S. economic data. However, it seems that the general consensus of a prolonged period of market volatility post Brexit seems to have been overdone as the markets have sprung into life.
The Brexit vote on Jun 24 sent shock waves through the global financial markets, confirming the worst fears of market watchers and industry experts. However, investors it seems have downplayed Brexit-related fears as reflected in the recent stock market rally as the benchmark S&P 500 index was up 1.45% in the first five trading days of July. On Friday, the S&P 500 closed at record high (2129.90) sparked by the robust June jobs report.
Value Investing
The market turmoil in the last couple of weeks has made several stocks attractive for value investing, especially when they are supported by a good Zacks Rank. Our Zacks Rank system is a timeliness indicator, meaning that value investors can use it to identify precisely when a company's prospects are beginning to improve. Stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) are the ones to look out for. Moreover, stocks rated ‘A’ or ‘B’ through our Value Score System are likely to outperform based on their valuation measures.
AT&T Inc. – Offers Significant Value
This U.S. telecom behemoth AT&T Inc. (T - Free Report) currently carries a Zacks Rank #2 along with a value style score “B.” The current valuation of AT&T looks promising. The company has a current forward P/E multiple of 14.9 and P/B multiple of 2.1 (a P/E ratio below 15.0 and a P/B ratio under 3.0 generally indicates value). These multiples are below the peer group averages. Furthermore, AT&T currently has a dividend yield of 4.51% compared with the industry average of 3.24%.
AT&T's combo-offer of fiber-based U-verse TV and Internet service, newly acquired DIRECTV’s satellite TV and GigaPower Internet service can now provide traditional cable video as well as mobile video streaming services.
The company is also moving full steam ahead with its objective to roll out ultra-high-speed Internet service across the country. Moreover, plans to offer three Internet TV packs for different categories of viewers bode well. Also, the field test of the next-gen 5G wireless technology, initiatives in the IoT space and investments in the Mexican telecom market and fiber arena build optimism.
Other Top Picks
In addition to AT&T, we offer 4 more stocks with Zacks Rank #1 and a value style score “A.”.
NGL Energy Partners LP (NGL - Free Report) : The company is a limited partnership operating a vertically-integrated propane business with three operating segments: retail propane; wholesale supply and marketing; and midstream. NGL Energy has a current P/E of 16.2x, P/B of 1.1x and P/S of 0.2x. Its current dividend yield is 8.40%.
Sotherly Hotels Inc. (SOHO - Free Report) : The company is a real estate investment trust. It is focused on the acquisition, renovation and upbranding and repositioning of upscale to upper upscale full-service hotels in the U.S. Sotherly Hotels has encouraging valuation metrics such as 4.5x P/E, 1.6x P/B and 0.6x P/S. The company currently has a dividend yield of 6.33%.
Just Energy Group Inc. : The company is engaged in the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy Group has a current P/E of 19.6x and P/S of 0.4x. Its current dividend yield is 6.28%.
Braskem S.A. (BAK - Free Report) : The company figures as the largest petrochemical operation in Latin America and among the five largest private companies in Brazil. Braskem also has highly significant valuation metrics such as 4.8x P/E, 4.8x P/B and 0.3x P/S. The company currently has a dividend yield of 6.02%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>