Investors have pushed AT&T down close to 52-week lows.
But, as is often the case, it is much ado about nothing.
In fact, the company has made solid progress over the years. From its place as the country's second-largest wireless carrier behind Verizon Communications to becoming its biggest pay-television provider, thanks to its DirecTV buy, AT&T has made huge improvements to its business.
AT&T may no longer be growing as fast as T-Mobile US, but analysts expect the company to sport more than 8% earnings growth on an average annual basis for the foreseeable future, outshining larger peers such as Verizon Communications.
Shares of AT&T, trading at an enterprise value to earnings before interest, taxes, depreciation and amortization ratio of 6.4 times, presents an opportunity to invest in the future of media and telecom.
In fact, this dividend aristocrat with a 31-year track record of payouts, offers a solid blue-chip yield of 5.22%. Unlike the high but unsafe yields of CenturyLink and Frontier Communications, AT&T's dividend is secure and stable, well supported by $15 billion-plus in free cash flow.
However, those who still aren't convinced about AT&T's plans for Time Warner and want to invest in a play on international telecom should take a look at Vodafone (VOD) . The U.K.-based company offers 16% upside potential and a forward annual yield of 5.56%, even as its shares languish near one-year lows.
Given Vodafone's massive size, wide scale and relatively healthy balance sheet, compared with many other limited or regional specific plays such as Deutsche Telekom, Orange, Telecom Italia and Telefonica, the stock is a smart long-term investment.
European telecom players should witness a stable outlook stretching into the New Year, in part helped by the opportunity to raise prices.
As per a Moody's report, this should support revenue growth in the next 12 to 18 months.
For a long time, Vodafone was a major player in wireless connectivity in the U.S. This ended after its operations were bought by Verizon and the company decided to focus on Europe and high-growth potential emerging markets.
Although foreign-exchange issues and competitive pressures may remain, Vodafone's deep experience in handling telecom networks in 26 countries, partnerships with mobile networks in another 52 and fixed broadband operations in 17 markets makes this company an unbeatable global investment.
The two dozen analysts with 12-month price forecasts for Vodafone's stock have a median target of $31.40, which would represent a 15.6% gain from the near 52-week lows.
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