GO
Loading...

Cramer Reiterates a ‘Buy’ on AT&T, Verizon

Wednesday, 9 May 2012 | 8:40 PM ET

AT&T and Verizon Communications may be flirting with their 52-week highs, but considering the widespread use of these wireless providers, Jim Cramer thinks both stocks are relatively cheap and should be bought.

AT&T
Getty Images
AT&T

The "Mad Money" host reaffirmed his bullish stance on both stocks after recently interviewing each company's CEO at CTIA Wireless, the U.S. cellphone phone industry's annual trade show.

With Verizon , investors get one-half of a wireless company, as Vodafone Group owns the other half. Cramer thinks this business has multiple years of growth ahead of it, though. He expects a majority of subscribers will upgrade to its heavily subsidized smartphones within the next 12 months, which will likely result in considerable margin expansion.

No Huddle Offense: Cramer 'Smitten' with AT&T and Verizon
Mad Money host Jim Cramer explains how both telecommunication giants are undervalued and offer investors the best alternatives to certificates of deposit and long-term bond funds.

In addition, Verizon has developed other ways to generate sizable amounts of cash without a ton of investment. Cramer cited its Fios network for high-speed internet and landlines as examples.

Investors in AT&T get its entire wireless business. Additionally, AT&T has already paid the price to subsidize its subscribers’ migration to smartphones.

Cramer said both AT&T and Verizon share a lot of desirable traits, too. Each company exhibits consistent growth, expanding gross margins and absolutely no exposure to Europe, which still struggles with its ongoing debt crisis.

Also, both AT&T and Verizon pay “monster” dividend yields of 5.3 percent and 4.9 percent respectively. Thanks to a steady increase in mobile phone usage coupled with higher fees, Cramer thinks both companies can afford to pay these dividends for a long time.

Read on for Cramer's Top Dividend Stocks

  Price   Change %Change
T
---
VZ
---

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

  Price   Change %Change
T
---
VOD
---
VZ
---

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.