We recently compiled a list of the 8 Unstoppable Stocks That Could Make You Richer. In this article, we are going to take a look at where Telephone & Data Systems, Inc. (NYSE:TDS) stands against the other unstoppable stocks.
Navigating Volatile Equity Markets
In the current climate of extreme market volatility, finding safe and stable investments is challenging. Valuations seem overstretched following one of the longest bull runs, with major indices reaching record highs. Despite this, the focus should remain on stocks of companies with strong fundamentals and solid long-term prospects.
Similarly, it’s crucial to consider companies that can withstand uncertainties caused by various headwinds, such as rising geopolitical tensions, the US election, and the high interest rate environment. While the recent Federal Reserve rate cut, declining inflation rates, and a prolonged bull market have benefited investors, not all stocks are responding uniformly.
READ ALSO: 8 Worst Performing Tech Stocks in 2024 and 10 Worst Performing Blue Chip Stocks in 2024.
How Are Economic and Geopolitical Factors Influencing Investments?
As the US election approaches, economic issues remain the primary concern for most voters. Despite the equity market’s upward trend, the US economy has experienced several shocks, including slowdowns in the labor and real estate markets. Although inflation has decreased from a high of 9.2% to 2.4%, the Federal Reserve had to cut interest rates by 50 basis points to prevent a recession.
“Even as the data shows inflation has theoretically been slowing down, it has become more important in people’s minds over the course of the last three quarters, not less important,” said Jay Campbell, partner at Hart Research, the Democratic pollster for the survey.
The significant drop in inflation has coincided with higher growth expectations, driving upward momentum in the equity markets. Strong macroeconomic data, such as impressive GDP and retail sales figures, have supported these growth expectations. Amid these expectations, bond yields have increased, indicating that investors are selling safe-haven assets. Economists at Goldman Sachs suggest that the rise in yields is due to promising growth prospects rather than factors like the anticipation of Donald Trump’s potential presidency or concerns about the Fed’s rate cuts causing inflation to spike again.
“Yields have risen significantly over the past several weeks, which we find has owed primarily to continued strong U.S. growth momentum rather than shifts in election odds,” Goldman said in a recent note.
Conversely, escalating trade and tariff tensions between the US and China pose a threat to market sentiment. The International Monetary Fund has warned that these tensions could have costly economic consequences globally.
“We are seeing geopolitically driven trade around the world, which is why when you look at overall trade to GDP that’s holding up fine, but who’s trading with whom is certainly changing,” said Gita Gopinath, deputy managing director of the International Monetary Fund, to CNBC on October 23, 2024.
In response to perceived unfair trade practices by Beijing, the US and EU have increased tariffs on certain Chinese goods, further escalating trade tensions this year.
Despite rising geopolitical tensions, long-term investing remains the best strategy for building a profitable portfolio and sustaining growth over time. Key factors to consider include investing in businesses rather than just share prices, understanding the underlying business, and consistently investing during both market highs and lows.
Our Methodology
For this article, we identified approximately 20 stocks with a year-to-date share price gain of over 30% as of October 25 and an average analyst price target upside of at least 30%. We then narrowed the list to the 8 stocks with the highest average analyst price target upsides, ranking them primarily by upside potential and secondarily by year-to-date gains.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A well-dressed executive walking along a network of wires, demonstrating the power of a telecommunications company.
Telephone & Data Systems, Inc. (NYSE:TDS)
Average Analysts Upside Potential as of October 25: 37.13%
Year-to-date gains: 56.99%
Number of Hedge Fund Holders: 32
Telephone & Data Systems, Inc. (NYSE:TDS) is an unstoppable stock that could make you richer as it navigates the competitive telecommunication sector with significant success. While the stock is already up by more than 50% for the year, analysts believe it boasts a 37.13% upside potential owing to its strong operational execution and its ability to adapt to dynamic market demands.
Telephone & Data Systems, Inc. (NYSE:TDS) has inked a deal to sell its cable operations in Texas to Poka Lambro Telecommunications, Ltd. and Nevill Holdings, Inc. As TDS concentrates on its core markets and seeks to increase profitability, the deal, which is anticipated to close in the fourth quarter of 2024, represents a strategic change for the company.
The deal is anticipated to improve TDS’s core-focused service offerings and give clients access to more advanced technical capabilities. This will probably boost TDS’s earnings in the following quarters and solidify its standing as a telecom industry leader.
The increased focus on the core business catalyzed the company’s solid second-quarter results. Revenues in the quarter totalled $1.24 billion, beating consensus estimates by 0.02%. Likewise, the company’s net loss shrunk to $0.13 a share compared to a loss of $0.17 a share last year.
Telephone & Data Systems, Inc. (NYSE:TDS) is an unstoppable stock that could make you richer, given that it has maintained its dividend payments for 51 consecutive years and raised its dividend for 31 straight years. The stock yields 0.58%.
Insider Monkey’s Q2 2024 survey of 912 hedge funds revealed that 32 were the firm’s shareholders. Telephone and Data Systems, Inc. (NYSE:TDS)’s largest stakeholder in our database is Dan Loeb’s Third Point due to its $46.97 million stake.
Overall TDS ranks 7th on our list of the unstoppable stocks that could make you richer. While we acknowledge the potential of TDS as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TDS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.