The big market rout has left no shortage of stocks trading at large discounts to their previous valuations. The important question is which ones are actually a good value given the eruption in markets. With that in mind, here are four well-known names to take a look at. They are General Motors, CVS Health, Macy’s, and American Airlines. GM and AA are trading at near 5x earnings, the latter despite a thriving business. AT&T is interesting too, as shares have fallen 20% in the last year, and the dividend has swelled to 6.7%.
FINSUM: This seems like a good chance to pick up some healthy stocks that have been heavily dented by a selloff, but are poised to recover. We particularly like American Airlines and AT&T.
While all the attention is going to the new iPhone due to debut tomorrow, a much less hyped product may start a dramatic change in the industry. The new Apple Watch coming out is likely to use an emerging technology, called an eSIM, which allows it to use the internet without a connection to a phone. This would cause big gains for makers of those kind of chips, and when it is eventually adopted by the iPhone it could be transformative for the industry. Telecoms could be very wounded as it would signal Apple grabbing more control over the relationship. The reason why is that with eSIMs, customers would now longer need to go into telecom stores to activate phones (when they put your current SIM card in), and would not see store promotions. Instead, they could just choose a carrier from a dropdown menu on their phone and work on a pay-as-you-go plan.
FINSUM: This is not good news for telecom companies. Telecom stocks could take a hit when the Apple Watch comes out, and this will be why.
This Barron’s article says that Verizon may be a major opportunity right now. The stock is now at its lowest valuation in 15 years, and has a healthy dividend of 4.7%. The stock has been deeply hurt this year, falling 10% while being well-outperformed by rival AT&T. However, this piece which is based on an analyst’s opinion, contends that it financials are actually in better shape than AT&T, as is its earnings trajectory. The shares are currently trading at just “0.65x the P/E multiple of the S&P 500” says the article.
FINSUM: Good dividend yield and solid financials coupled with a low valuation sounds like it could be a good buy.
Net neutrality was a big term over the last couple of years as major companies did battle over whether all data transmitted through the internet should be treated fairly. Obama helped make that idea the standard, but Trump is seen as a foe of neutrality. Such a view became more tangible when the administration cancelled a review of possible violations of the rule in the form of favoring a business’ own services, something referred to as “zero rating”. This article says that consumers will love the end of the rule though, as it will likely result in a wealth of free data streaming for specific services. The worry is that getting rid of the rule will allow big companies to box out young startups, slowing the pace of entrepreneurship and innovation.
FINSUM: This article paints this as a “good in the short, bad in the long run” situation, and on the surface that view makes sense.
Source: Wall Street Journal
AT&T, the telecoms giant, is coming off a strong fourth quarter. The biggest hurdle for the company remains its acquisition of Time Warner, and despite rhetoric to the contrary, investors and the company seem confident Trump will approve the deal. The big upside for AT&T appears to be an improved operating environment under Trump. In particular, the net neutrality rule could be abolished, opening the door for more profits for the company. The company’s CEO is also optimistic Trump will succeed in lowering corporate taxes.
FINSUM: If net neutrality gets cancelled, AT&T could be one of the big gainers.