AT&T Inc. (T) Is Starting to Look Cheap

America Movil SAB de CV (ADR) (NYSE:AMX) has operations in 18 countries in the Americas, and gives AT&T exposure to the growing South American economies. America Movil SAB de CV (ADR) (NYSE:AMX) is also heavily invested in lucrative wireless, which should continue to provide solid profits and growth:

Source: America Movil investor relations

The company also recently saw a quarterly year-over-year increase of an additional $17 million wireless subscribers. America Movil also has aspirations of further expanding into Europe that are becoming reality.

The bottom line

Shares of AT&T Inc. (NYSE:T) look attractive at current levels. The company has strong pricing power and is situated in a duopolistic environment with high barriers of entry. With the mobile revolution in full force, wireless and data usage will continue to be in high demand, with AT&T and Verizon being the main benefactors.

Both carriers are also in the process of rolling out 4G next generation technology, which will attract new customers. While this is highly capital intensive and even a drag on earnings now, it should bolster the bottom line significantly later.

While Verizon seems to be growing faster, AT&T is cheaper in relation to forward earnings and also yields over 5%–as opposed to Verizon’s yield of about 4%. An extra percentage point can make quite a difference over the long-term. AT&T also has a good sized stake in the growing and lucrative America Movil, which gives it another edge over Verizon.

Starting a position in AT&T Inc. (NYSE:T) now looks like a good idea– especially due to its cheap valuations and improving fundamentals and growing opportunities, as well as its ability to generate massive amounts of free cash flow.

The article AT&T Is Starting to Look Cheap originally appeared on Fool.com and is written by Joseph Harry.

Joseph Harry owns shares of AT&T.; The Motley Fool has no position in any of the stocks mentioned. Joseph is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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