Weekly Wrap: OPEC Cuts; AT&T Fails to Wow

Jeremy Glaser: Oil soars, AT&T doesn't rock the industry, and are there values in software and IT? This time on the Morningstar Weekly Wrap.

After months of discussion and negotiation, OPEC agreed to reduce oil production. The cuts, which represent around 1% of global production, sent the price of crude and shares of oil producers soaring this week. The jury is still out on how successfully the cartel will execute these cuts and what the true long-term effect on prices will be.

AT&T's new over-the-top TV service, DirecTV NOW, doesn't look like it is going to be a game-changer. Morningstar media analyst Neil Macker describes the pricing structure as "sedate" and that it isn't out of line with existing services like Dish's Sling and Playstation Vue. Still, he thinks over time these services will help offset the decline in traditional cable subscriptions. He sees Disney, with its strong content, as one of the best positioned in this changing landscape.

Two undervalued technology firms were in the news this week. First was IT services firm Cognizant, which received a letter from hedge fund Elliott Management saying they now own a 4% stake in the firm and that they are looking for the board to implement some operational and other improvements to boost the company's share price. Morningstar's Andrew Lange agrees the shares are undervalued and that the market isn't appreciating the firm's status as a market leader in next-gen digital and cloud workloads.

Guidewire, which provides software for the property and casualty insurance industry, reported results that were ahead of analyst Rodney Nelson's expectations, but shares sold off on concerns about management's guidance. With shares trading in 4-star territory, Nelson thinks the company is worth a hard look on any future stock price weakness.

And in case you missed it, Karen Wallace took at look at the 10 cheapest stocks in the Morningstar Dividend Yield Focus Index this week.