2023-12-24 07:25:00 ET
The last few years have been a miserable time to own AT&T (NYSE: T) stock. Thanks largely to its dividend income, AT&T investors earned a total return of just 13% over the last five years, a span when the S&P 500 drove total gains of nearly 110%. Additionally, the company faces considerable financial challenges because it has to spend heavily to remain competitive with Verizon Communications and T-Mobile .
Nonetheless, AT&T has reached a point where it has become too compelling to ignore, and one factor likely makes it a buy regardless of the apparent trials that might otherwise derail the stock.
The reason to buy AT&T stock is its compelling valuation. The stock currently sells at a P/E ratio of 7. This is a small fraction of the S&P 500's average P/E ratio of 26. Since numerous technology stocks experienced multiple significant expansions amid the AI-driven boom, such valuations are uncommonly low in today's tech industry.
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AT&T Stock Is a Buy for This Reason