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Tim Brown: Don't Count Out AT&T

Despite a minor setback in price, you should take a second look at AT&T.
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Some of the most dominant NFL teams over the last few years have gotten off to a rocky start. The banged-up Indianapolis Colts dropped their opener against the Chicago Bears, while the New England Patriots suffered a loss of a different kind while defeating the Kansas City Chiefs by a touchdown.

While the Colts may be able to bounce back, the loss of Patriots quarterback Tom Brady has the potential to really shake things up in the AFC East division. However, both teams have great coaching staffs and it would be a mistake to count either of them out over the long haul. A team is made up of more than just one player, although Tom Brady is one of a kind.

Keeping with that theme, today I'm going with a company that has withstood the test of time, even if it is a little beaten down at the moment. I like


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. Right around the July Fourth holiday, I recommended picking up some shares of this company. Now it's time to grab some more. At the time, the stock was at $33 and change. In early trading today, it was at about $31.

The stock hit its 52-week low of $29.72 in early August and has not shot back up yet. It has shed more than 22% of its value in the last year. In addition to its deal with


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and the iPhone, and its current price, there are a number of reasons the like AT&T. It has a forward price-to-earnings ratio of just 9.41. That means it is being underestimated big time.

Looking at its books, the company has $32.5 billion in operating cash flow and $1.63 billion in the bank. And it has a return on equity of about 12.

Plus, it always helps when others reinforce your thoughts. A research note from Bernstein Research analyst Craig Moffett yesterday did just that. In his note, he said that the economic slowdown is helping AT&T and


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gain market share in the wireless market as smaller players struggle. During the second quarter, for example, the two companies enjoyed 84% of the net market growth. While a big number might be expected from two industry behemoths, that number stood at just 60% in the year-ago period.

Out of the two, he likes AT&T more. Moffett rates AT&T as "Outperform" and set a price target of $42. That dollar amount is quite a bit higher than the price it's currently trading out and nearly matches its 52-week high. AT&T is a tested, solid company that has smart leaders and a good business. It also has a very high customer retention rate.

If you want to pile it on, grab some more shares and...

Keep moving the chains!

At the time of publication, Brown had no positions in stocks mentioned, although positions may change at any time.

Tim Brown played 16 seasons in the NFL, where he made nine Pro Bowls. After a brief stint with the Tampa Bay Buccaneers in 2004, Brown retired as an Oakland Raider. He was a Heisman Trophy winner in college for Notre Dame.