2 Very Cheap Turnarounds Yielding Up To 7%

seekingalpha04-27

AT&T and Bristol-Myers Squibb are two beaten-down stocks with attractive dividend yields.AT&T has solid operating fundamentals and a low valuation, while Bristol-Myers Squibb has a strong pipeline and...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n2 Very Cheap Turnarounds Yielding Up To 7%\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-27 20:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4686807-2-very-cheap-turnarounds-yielding-up-to-7-percent><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>AT&T and Bristol-Myers Squibb are two beaten-down stocks with attractive dividend yields.AT&T has solid operating fundamentals and a low valuation, while Bristol-Myers Squibb has a strong pipeline and...</p>\n\n<a href=\"https://seekingalpha.com/article/4686807-2-very-cheap-turnarounds-yielding-up-to-7-percent\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2237438978.USD","symbol_name":"Amundi Funds US Pioneer A2 (C) USD","start_time":0,"source_url":"https://seekingalpha.com/article/4686807-2-very-cheap-turnarounds-yielding-up-to-7-percent","article_id":"2430714454","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/916429130/image_916429130.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2430714454","pubTimestamp":1714220100,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"AT&T and Bristol-Myers Squibb are two beaten-down stocks with attractive dividend yields.AT&T has solid operating fundamentals and a low valuation, while Bristol-Myers Squibb has a strong pipeline and is undervalued.Both stocks offer potential for high income and capital appreciation if their valuations reset.   ISerg Turnaround plays can be highly rewarding for investors willing to go against the grain. This includes names that for one reason or another have been beaten down in price by the market due to perceived risks or memories of management missteps in the past. One such example that I can think of its Kinder Morgan , which judging by readers' comments, still carries a bad taste after its dividend cut from years ago despite solid and growing operating fundamentals, reasonably low valuation, and dividend growth. This brings me to the following 2 names, which have underperformed their respective industries from a share price perspective over the past 12 months, pushing their yields","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2237438978.USD":"Amundi Funds US Pioneer A2 (C) USD","LLY":"礼来","LU1621767810.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"A\" (EUR) INC","TMUS":"T-Mobile US Inc","BMY":"施贵宝","LU0672654240.SGD":"FTIF - Franklin US Opportunities A Acc SGD-H1","LU0276348264.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN\"AUP\" (USD) INC","LU1291159041.SGD":"CPR Invest - Global Silver Age A2 Acc SGD-H","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist","LU1303367103.USD":"摩根大通多经理另类基金 A (acc)","PFE":"辉瑞","BK4532":"文艺复兴科技持仓","XPH":"SPDR S&P Pharmaceuticals ETF","LU2098885051.SGD":"JPMorgan Funds - Multi-Manager Alternatives A (acc) SGD","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","SG9999013999.USD":"UOB UNITED GLOBAL HEALTHCARE FUND (USDHDG) INC","BK4534":"瑞士信贷持仓","LU0238689110.USD":"贝莱德环球动力股票基金","LU1621768115.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"B\" (EUR) INC","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","VZ":"威瑞森","AMGN":"安进","LU2242646821.SGD":"Fidelity Global Dividend Plus A-MINCOME(G)-SGD","LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","KMI":"金德尔摩根","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","LU2125154778.USD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (USD) INC","PFE.AU":"PANTERA MINERALS LTD","LU1621767737.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"AAZ\" (EUR) ACC","T":"美国电话电报","LU0234572021.USD":"高盛美国核心股票组合Acc","LU2125154935.USD":"ALLSPRING (LUX) WF GLOBAL EQUITY ENHANCED INCOME \"I\" (USD) INC"},"translate_title":"2非常便宜的周转收益率高达7%","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PFE":1,"XPH":1,"VZ":1,"TMUS":1,"T":1,"PFE.AU":1,"AMGN":1,"BMY":1,"LLY":1,"KMI":1,"US10Y.BOND":0.62,"US12M.BOND":0.62,"US2Y.BOND":0.62,"US30Y.BOND":0.62,"US3Y.BOND":0.62,"US5Y.BOND":0.62,"US6M.BOND":0.62,"US7Y.BOND":0.62,"US912797FH58.BOND":0.6,"US912797FS14.BOND":0.6,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HG57.BOND":0.6,"US912797HH31.BOND":0.6},"content_text":"AT&T and Bristol-Myers Squibb are two beaten-down stocks with attractive dividend yields.AT&T has solid operating fundamentals and a low valuation, while Bristol-Myers Squibb has a strong pipeline and is undervalued.Both stocks offer potential for high income and capital appreciation if their valuations reset.   ISerg Turnaround plays can be highly rewarding for investors willing to go against the grain. This includes names that for one reason or another have been beaten down in price by the market due to perceived risks or memories of management missteps in the past. One such example that I can think of its Kinder Morgan (KMI), which judging by readers' comments, still carries a bad taste after its dividend cut from years ago despite solid and growing operating fundamentals, reasonably low valuation, and dividend growth. This brings me to the following 2 names, which have underperformed their respective industries from a share price perspective over the past 12 months, pushing their yields to attractive levels. In this article, I highlight each name and discuss why enterprising investors may want to consider them at current prices for high income and capital appreciation potential should they get a valuation reset, so let's get started! #1: AT&T AT&T (T) is a stock that catches a lot of flak from investors in various forums for ill-fated acquisitions and management missteps in the past. Since then, however, it's refocused its business and investments around its core offerings in wireless connectivity and broadband. Over the past year, AT&T stock has well-underperformed that of its peers with a 5% decline, compared to 6% and 12% rises in Verizon (VZ) and T-Mobile (TMUS), respectively.   AT&T vs. Peers 1-Yr Price Performance (YCharts) The market does not appear to be giving AT&T sufficient credit, however, as it recently beat profit expectations in its Q1'24 results that were released on April 24th. It also saw 349K net postpaid additions during Q1 against the backdrop of a low 0.72% churn rate, its lowest first quarter churn rate ever on record. This is despite the customer outage that customers suffered a couple months ago in February. Also encouraging, Retail Postpaid ARPU (average revenue per user) grew by 1% YoY to $55.57, signaling that AT&T didn't have to resort to discounting to retain and/or attract customers. Management is guiding for 3% EBITDA growth this year, on the back of 4.3% EBITDA growth during Q1. This could be supported by wireless customer retention as well as continued fiber rollout. AT&T has now penetrated 40% of its fiber base, a figure that sits ahead of management expectations. Over the past 12 months alone, AT&T grew fiber customer count by 1.1 million, bringing total fiber customers now to 8.6 million. Importantly, management is also focused on deleveraging the balance sheet, bringing net debt to EBITDA to 2.9x in the first quarter, and maintains guidance for reaching a 2.5x leverage ratio by the first half of 2025. AT&T currently yields 6.7%, and the dividend is well-covered by a 35% payout ratio, leaving plenty of retained capital for continued debt paydown and reinvestment in to the fiber rollout. At the current price of $16.58, AT&T is attractively valued with a forward PE of just 7.5x, making it cheaper than Verizon's 8.6x PE and far cheaper than T-Mobile's 18.2x PE. My 'Buy' thesis remains largely unchanged from when I last visited the stock, with PE valuation not too far off from where it's at now, considering that it was predicated upon deleveraging of the balance sheet, fiber growth, and steady wireless churn, all of which the company is executing on. At the current price, the market is pricing in a declining EPS rate, whereas sell-side analysts who follow the company expect 3.5% annual EPS growth over the next two years, which I believe to be reasonable. With a lower valuation and similar dividend yield compared to Verizon, enterprising investors can capture the majority of the wireless industry with both of these names. AT&T is a 'Buy' #2:Bristol-Myers Squibb Bristol-Myers Squibb (BMY) is a large pharmaceutical company that's focused on the therapeutic areas of cardiovascular, oncology, and immunology. BMY has largely underperformed the SPDR Pharmaceutical ETF (XPH), which is made up of big names like Amgen (AMGN), Pfizer (PFE) and high-flying Eli Lilly (LLY) with its blockbuster GLP-1 weight-loss drugs Mounjaro and Zepbound. This is reflected by BMY's material 37% decline in share price over the past 52 weeks compared to just an 8% decline for XPH over the same timeframe, as shown below.   BMY vs. XPH 1-Yr Price Performance (YCharts) The market is rightly concerned about BMY facing generic competition for its blockbuster drug, Revlimid, which is used to treat MDS. Concerns may be overblown, however, as reflected by BMY's Q1 2024 results that were released on April 25th, which showed that first quarter revenue growing by 5% YoY (6% on an FX-neutral basis). This was driven by strong showings from Eliquis, Reblozyl and Opdualag, partially offset by Opdivo and Revlimid. It's worth noting that BMY posted a net earnings loss for Q1, and that was due to a one-time net impact of acquired IPRD (in-process research and development) charges and licensing income equating to ($6.30) per share. Importantly, BMY carries a robust pipeline to counter its patent cliffs over the next 5 years. This includes KarXT for the treatment of schizophrenia, Opdualag for lung cancer, which could be a next-generation replacement for Opdivo, and SystImmune, which represents the next wave of ADC (Antibody Drug Conguates) cancer treatments that specifically targets cancer cells. Importantly, BMY maintains a strong balance sheet with nearly $10 billion in cash and equivalents on hand. BMY has decreased its net debt balance by $2.7 billion since the end of 2022, and plans to further pay down debt by $10 billion over the next 2 years. It also carries an 'A' credit rating from S&P and has a safe net debt-to-TTM EBITDA ratio of 1.56x. The recent share price weakness has pushed BMY's dividend yield to 5.4% and the dividend is well-covered by a 31% payout ratio. BMY has also grown its dividend at a respectable 7.6% CAGR over the past 5 years and has 7 years of consecutive dividend growth. As shown below, BMY's dividend yield currently sits well above where it was over at least the past 10 years. (Note: The following chart shows TTM yield. Forward yield is 5.4%)   YCharts BMY appears to be a solid bargain at the current price of $44.70 with a blended PE of 8.4x, sitting well under its historical PE of 16.7, as shown below.   FAST Graphs My 'Buy' thesis around the stock remains largely unchanged from when I last visited the stock in February, when it traded at $48.52, as it continues to revolve around BMY's progress on its pipeline, capital returns, and undervaluation. At the current valuation, BMY is priced for no growth, whereas I believe it could reasonably deliver a long-term 5% annual EPS growth rate, which when combined with the dividend can produce at least market-level performance with a far higher yield. Risks to Consider  AT&T operates in a competitive space where players have limited pricing power. Macroeconomic headwinds could cause consumers to become more price conscious, which could pressure AT&T's ARPU. Also, higher interest rates could raise AT&T's cost of debt and pressure its bottom line. Bristol-Myers Squibb needs for its pipeline to show efficacy in order to replace lost revenue from patent cliffs. In addition, expanded Medicare drug price negotiations could result in margin pressure for BMY.  Investor Takeaway  I hope you enjoyed this piece about two very different companies that are beaten down in price, offering investors a well-above average dividend yield. While both names carry risks, it appears that they are more than baked into the price, while the market seems to ignore the positives and catalysts for each. As such, I believe both T and BMY represent decent value opportunities for contrarian investors who will be paid to wait before the market resets their valuations.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2430714454"}