There are always stocks that feel very cold to the touch, especially shivering to those who cannot afford to buy thousands of shares to make every uptick count. Companies in the technology sector are typically not this type, as they usually carry high betas (move more aggressively). However, today, you can find both the safety of an industrial name and the upside of a typical tech firm.
With new investors moving into technology names, such as Ray Dalio's buying of Netflix (NASDAQ: NFLX) and even Warren Buffett moving into Sirius XM (NASDAQ: SIRI), it is just a matter of time before other soldiers in the same space begin to see some similar treatment.
Within the wireless communications industry, it is one stock among a small group of competitors that takes the stand to bring you the best of everything it can. From bullish price momentum all the way to analysts coming in to upgrade their price targets on the stock, there is a lot to like and not a lot to fear when it comes to T-Mobile US (NASDAQ: TMUS).
Safety first
Because 2023 was a year full of wild swings for the stock market and anyone brave enough to invest in it, some money managers and Wall Streeters may still be licking their wounds before returning to the battlefield. For this reason, it is natural that most investment dollars will seek a safe home in a low-beta stock.
Beta is a commonly used measure of how volatile a stock has been historically compared to a benchmark like the S&P 500 in hopes that its future behavior will be related to this measure. A beta above 1.0 usually means the stock will be more volatile than the market; the opposite is true for a beta below 1.0.
Knowing what you know now, it should not be that surprising to learn that T-Mobile stock carries a beta of 0.53, meaning that it moves nearly half as much as the S&P does, or at least that is the expectation. The business itself also allows for this to be the case.
No matter whether the economy is booming, like it seems to be doing currently, or whether you find yourself in the middle of a recession, people still need to pay their phone bills. You can get rid of your car, but you need your phone to have data to call an Uber Technologies (NASDAQ: UBER).
Because of this natural characteristic of where T-Mobile operates, it makes the stock (and its financials) a very safe place to be betting on, particularly for those looking to slowly get back after being rocked up and down all throughout 2023.
Now, a story without numbers is just a fairytale, and you are not here for that, so here are the figures:
Sit down time
97.0% of its 52-week high is where T-Mobile stock sits today, which is also a level that flirts with new all-time high prices for the stock. That should tell you all you need to know about how the market feels, but wait, there's more, a lot more.
The Communication Services Select Sector SPDR Fund (NYSEARCA: XLC) is also at new highs for the year, so it is safe to say that T-Mobile is also running with a team of winning stocks. However, not all are as lucky to shine in this way.
You see, other competitors like Verizon Communications (NYSE: VZ) have not been as lucky, with Verizon stock trading at a lower 88.0% of its 52-week high. The price underperformance is, of course, brought on by other fundamental reasons rectifying why T-Mobile is the value pick.
Starting with the reason behind stock price movements, which is typically earnings per share, it can be very enlightening to see where the future earnings expectations lie for both these names. The answer will shock you.
Verizon stock analysts definitely see the upward momentum in the sector. Still, they took a second look at the financials and decided to take some risk off the table, which is why they expect earnings to contract by 1.5% in the next twelve months. Maybe this justifies the lack of price performance in the market.
On the other hand, T-Mobile analysts took a completely different stance (for the better). With a confidently bold projection for 38.6% earnings growth in the next twelve months, the stock also justifies the bullish price action it has delivered in the past year.
Seeing a consensus price target of $182.3 for the stock shouldn't surprise you either; that's 16.3% above where the stock is trading today, by the way. Not to mention that it was recently upgraded by both Wells Fargo (NYSE: WFC) and UBS (NYSE: UBS) in light of the unstoppable momentum seen in the stock.
