The US stock market has been on a steady decline this year due to the economic crisis, hitting new lows over and over again.
For example, one of the most important American indices, the Nasdaq Composite Index, has fallen by 28% over the last 12 months so far. But, when one fights to the last ditch, another gets rich, and even in this declining market there are some stocks that managed to stand ground. Wanna find out how a telecom provider has managed to hold the top spot in a world where nobody even likes talking on the phone?
First, let’s take a look at the Nasdaq Index to be sure that the comparison of T-Mobile’s numbers against the market is precise.
The Nasdaq is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange. Along with the DJI and S&P 500, it is one of the most-followed stock market indices in the US. It’s been struggling through 2022 and it seems the index could close the year with losses of over 28%. And in our humble opinion, Christmas miracle won’t happen.
The reason for this distressing scene is a long-term crisis started in mid-2019, when analysts were constantly arguing that the market was overvalued. Later, the world faced Covid-19 which only aggravated matters, and as soon as the things settled down the world delved into chaos caused by a large-scale military conflict and a subsequent severe energy crisis.
The consequences of these events connect the financial markets across the world, and ultimately mean that almost everyone on the planet is now facing increasing inflation and rising consumer prices. The Fed stepped up to raise interest rates, and each one of those hikes sends a bearish shudder through the market.
While all this is going on though, T-Mobile US has seen its stock pop nearly 20% so far this year. How is this even possible?
Investors have faith in this brand and its unlimited growth opportunities. Contributing to that is the 5G network that T-Mobile is developing for itself – more and more US states focus on improving their connection networks. The company has taken it upon itself to solve this problem (along with a few competitors), thereby expanding the circle of consumers.
Another contributing factor is the $14bn buyback program the brand announced in September 2022.
T-Mobile is not without pressure though, one of the key ones being inflation which could bring down future earnings potential and continue to increase costs.
Nevertheless, most analysts have assigned T-Mobile as a ‘Strong Buy’ rating and think the stock is undervalued right now but with a high potential for future earnings growth.
An average estimation by experts is for an upside of +24% in the next 12 months, even though the US market experiences prolonged price declines. See, there’s always growth in adversity, if you look hard enough. However, before buying any papers, make sure to always do your own research.