Communication Services: We Like the Unloved
Traditional telecom has lagged, but the rest of the sector has been strong.
The Morningstar U.S. Communications Services Index (Exhibit 1) continues to perform well amid broader market volatility. The sector consists of four major types of companies: traditional phone companies, cable companies, wireless carriers, and infrastructure firms. Traditional phone companies AT&T and Verizon dominate the index. Verizon shares have stagnated this year after a fantastic run in 2018, while AT&T has roughly kept pace with the market, bouncing back from a rough sell-off after the Time Warner merger. We believe AT&T shares have more room to run.
In choppy markets, telecom generally offers a smoother ride - source: Morningstar Analysts
Michael Hodel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.