Like real estate and utilities, the telecommunications sector is viewed as a bond proxy and therefore is also seen as vulnerable to rising interest rates. Of those three sectors, only telecom is lower year-to-date and the group is being thumped by utilities.
“The group has also underperformed utilities by 2,200 basis point or 22 percentage points. Lee noted that the four times that has occurred in the last three decades, there was always reversion to the mean in the six months following. The strategist had many other points to back up his argument — uber bearish analysts, spectrum consolidation, telling technical signals,” according to Barron’s.
The good news is that AT&T and Verizon, the dominant telecommunications names and the biggest holdings in the sector’s ETFs are attractively valued, a trait that is increasingly hard to find among U.S. stocks in nearly any sector.
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