Communication Services: We Like the Unloved

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