We recently compiled a list of the 10 Best Stocks Under $50 to Buy Right Now.In this article, we are going to take a look at where AT&T Inc. (NYSE:T) stands against the other stocks.
From a certain perspective, domestic equities are off to a strong start this year. Despite a large selloff on February 21, the S&P 500 has gained a healthy 2.2% in less than two months, and the Nasdaq Composite and Dow Jones Industrial Average are not far behind. If they can keep this momentum going, they're probably in for another successful year. Looking at the market in detail however, US stock indexes appear to be riding the coattails of the significant lead they built up after Trump's election on November 5 last year, much unlike their overseas competitors. According to JPMorgan, the relative underperformance of US stocks this year represents a 10% - 20% reversal of the pro-US investment pattern seen from April 2023 until the end of last year. Furthermore, the current excitement around Chinese AI firm DeepSeek has caused investors to reconsider US equity values, making Chinese tech stocks more tempting in the short term.
Inflation expectations have also risen, with the one-year projected inflation rate for US consumers rising to 4.3% in February from 3.3% in January. This increase in inflation expectations, along with a slowing economy, has sparked fears about stagflation, which is characterized as stalled growth and rising prices. According to a Bank of America poll of global fund managers published on February 18, the number of investors expecting stagflation in the coming year has hit a seven-month high. At the same time, investors remained bullish on stocks, perceiving a trade war as a low-probability risk.
However, it would be foolish to rule out US stocks completely, given that US shares outperformed their international counterparts from the 2008 financial crisis to the end of 2024. Although international markets appear to be the hot place to be right now, analysts have much to like about US equities, particularly as S&P 500 companies report their most profitable quarter in years, with Wall Street projecting double-digit profit growth this year. According to Richard Ward, Chief Investment Officer of Curated Wealth Partners, overseas companies have performed better recently because stock pickers are seeking for bargains, not because of their fundamentals. Ward believes that investors should stay in US markets and look towards lower-cost sectors such as small caps and financials instead. He added:
"The US is the best place to be because we continue to benefit from innovation and a healthier economy."
Our Methodology
For this list, we made use of stock screeners to note down companies with stocks that are trading at less than $50 per share. These companies were then narrowed down based on their popularity among hedge funds. The stocks on this list are ranked in ascending order based on hedge fund sentiment around them, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is AT&T Inc. (T) the Top Stock to Buy According to Sustainable Insight Capital Management?
A person in the field using their smartphone to connect to wireless communication services.
AT&T Inc. (NYSE:T), the world's largest telecommunications company and the largest provider of mobile telephone services in the United States, is a multinational conglomerate holding company based in Texas that provides global telecommunications, media, and technology services.
AT&T Inc. (NYSE:T) reported decent results for the fourth quarter of 2024, with revenues reaching $32.3 billion, an increase of 0.6% from the same quarter last year. In addition, the company managed to rake in $5.3 billion in operational income and $4.4 billion in net profit. AT&T also recorded an operational cash flow of $11.9 billion in the quarter, with a free cash flow of $4.8 billion.
On January 28, TD Cowen raised its price target for AT&T Inc. (NYSE:T) to $29 from $26, while maintaining a Hold rating on the company. The change reflected a favorable reaction to AT&T's recent performance and market developments. AT&T's Analyst Day provided no significant developments, although the company's FCF target for 2026 is regarded as aggressive and is likely to gain from working capital support. The firm also stated that tax regulations are expected to bring considerable assistance to the telecommunications company.
TCW Funds stated the following about AT&T Inc. (NYSE:T) in its Q3 2024 investor letter:
“AT&T Inc. (NYSE:T), based in Dallas, TX, is a nationwide provider of voice, video, and data communications services to businesses and consumers in the wired, wireless, and broadband. At initiation, the stock had a $141 billion market capitalization and met all five valuation factors with an above market dividend yield of 5.6%. From a sustainability prism, the company completed its commitment to invest $2 billion by the end of 2023 to help bridge the digital divide. AT&T is working on enabling low-income households to access to low-cost broadband services through its Access service plan as well as reaching out to more rural communities and Tribal lands where internet access remains a challenge. It is nearly 85% the way to providing one million people in need with digital resources through AT&T Connected Learning® with the goal to be reached by the end of 2025. In 2020, the company announced that it is committed to be carbon neutral by 2035 with zero carbon emission across all operations. It is deploying Smart Climate Solutions – through efforts like its Connected Climate Initiative – that will help enable its business customers to reduce their emissions as well. The company’s goal is to help collectively reduce its emissions by one billion metric tons – a gigaton – by 2035, compared to 2018 levels. The primary catalysts are new/strong management and restructuring. John Stankey was appointed CEO in July 2020 and he is committed to refocusing the company and improving its financial performance. The company combined its WarnerMedia operation with Discovery during 1Q:22 which eliminated AT&T’s exposure to the rapidly evolving media industry and refocused its core telecommunication business thus eliminating a major drag on profitability and the company’s balance sheet by reducing long-term debt from a peak $176 billion during 2020 to $142 billion at the end of June 2024 quarter. AT&T is moving aggressively to reduce cost and sell non-core assets such as its advertising platform Xander to Microsoft† which was accomplished during 2022. The company has redesigned its network to be software driven structure reducing the capital investment cycle in its national network – resulting in a network that is flexible with unrivaled speed and reliability – thus enhancing its nationwide position. By the end of 2023, it expanded its 5G network to reach more than 302 million people in nearly 24,500 cities and towns in the U.S. The company’s mid-band 5G+ network alone grew to cover more than 210 million people. AT&T is one of the largest investors in digital infrastructure in the U.S. Over the five years ending 2023, the company invested nearly $150 billion primarily in its wireless, fiber optics, and wireline networks. The extensive restructuring and refocusing of AT&T on its core business should result in improved earnings and cash flow while at the same time reducing uncertainty for shareholders.”
Overall T ranks 5th on our list of the stocks under $50 to buy right now. While we acknowledge the potential of T as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than T but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
