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Morning Matters:

Morning Matters Portfolio Sees A New Buy
by Geoff Garbacz

August 29, 2018

Pullbacks allow us to pick up new buy at great discounts. This morning we will add AT&T (T) to our Morning Matter Portfolio. We are really excited to add this name to the portfolio given that is has never been on our list. Telecommunications and Media companies have lagged the market returns and we think this is coming to an end.

AT&T was one of the top players in Telecommunications space and now the Media space as it acquired Time Warner. Earnings are due October 24th. The company will be at the Box Works 2018 Conference that starts tomorrow.

The Justice Department is still fighting the deal but it is a waste of time as the Judge told Justice not to bother with an appeal.

The stock is at $32.67 and our old price target is $41.72 so the discount to the price target is $8.15 or 16.44%. The upper bound is much higher at $48.08, 41.62% upside, and that is what we are aiming for with our price goal.

The price target does not reflect the merger with Time Warner. It is going to take a while for data services to merge the Time Warner data into AT&T.

Beta is 0.42 so this is an ideal name to add the portfolio with the market at an all time high and its beta is well below the market. Beta is a measure of risk and 1 equals the risk of the S&P 500. Therefore, risk is a below average which is a great benefit of this name.

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Estimates for this year are $1.856 and $3.68 for next year. We think these numbers will be adjusted higher through the year. The next earnings estimate is $0.95 in October. There is a great dividend of $2.00 or 6.12%.

Currently, the average rating is a hold. There is ample room for upgrades. Technically, the stock is trying to work back above $35. Hint as the stock gets above this get number then technical buyers will emerge as well.

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Trade Instructions

Buy at the market AT&T (T) at 9:45 a.m. EDT.

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