These 2 Dow Stocks Trade Near 52-Week Lows -- And They Should, Too

AT&T and Verizon are odd ducks on the Dow because they're exploring new 52-week lows rather than highs. And for very good reasons.

Mar 12, 2014 at 2:00PM

It's no secret that 2014 has been off to a rocky start for investors. Fifteen of the 30 Dow Jones Industrial Average (DJINDICES:^DJI) components are trading below their New Year's Eve prices. Even so, most Dow stocks remain strong -- 23 of the 30 members trade within 10% of their 52-week highs. The Dow itself has gained 13% over the last 52 weeks.

But there are exceptions to the market cheer. In particular, the two telecom stocks have failed to keep up with their Dow peers. Verizon Communications (NYSE:VZ) is down 3.2% year over year and AT&T (NYSE:T) has dropped 12%. Both stocks sit outside that 23-member club of performers that are within 10% of 52-week highs. They are, in fact, exploring new 52-week lows these days, which is rare among Dow stocks.

VZ Chart

VZ data by YCharts.

Telecom investors are voting with their wallets as the American wireless market reshapes under their feet. Verizon and AT&T used to be the unchallenged masters of their domain, always outgrowing smaller rivals. In a virtuous cycle, the profits gained from doing so helped Ma Bell and Big Red maintain their dominance by investing more than their competitors in next-generation network technologies.

All of that is changing. Now, T-Mobile (NASDAQ:TMUS) is the fastest-growing wireless network and Sprint (NYSE:S) has a new lease on life via parent company SoftBank's deep pockets.

Virtuous cycles can do amazing things for a company and its stock, but the same is true about the vicous kind of self-reinforcing feedback loop. Right now, AT&T and Verizon need to show that they can stem the bleeding at the hands of T-Mobile, while also stopping Sprint from gaining its full potential.

Verizon is making minor adjustments to its service plans, pressured by lower-cost options from T-Mobile and others. AT&T followed suit this week, but only for a limited selection of rate plans. Specifically, you can now save money on AT&T plans with one or two lines, but those with larger shared plans are out of luck.

The two giants don't look terribly convincing in their halfhearted attempts to stave off hungry challengers. They still wield a huge advantage in spectrum licenses, where only AT&T and Verizon have access to the coveted 700 and 800 MHz bands that cover large areas and cut through cluttered cityscapes with ease. But consumers must pay a premium to enjoy that unique advantage.

Still not convinced that Sprint and T-Mobile are eating the Dow telecoms' lunch? Let me add the two mini-majors to the chart above, and see if you can spot the trend. (Hint: T-Mobile and Sprint are crushing AT&T and Verizon in the open market.)

VZ Chart

VZ data by YCharts.

The smartphone boom is over. What's the next Big Idea?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or snapping up today's telecom giants before the smartphone boom catapulted them skyward. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers