Cramer: Old Empires, Verizon and AT&T, Strike Back

 | Jul 27, 2017 | 12:00 PM EDT
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Are the empires striking back? This morning Verizon (VZ) reported earnings that were spot on, with a very good gain in new subscriptions. Shockingly, the company added 614,000 wireless postpaid subs. That's versus a 307,000 decline last quarter and a forecast of less than 100,000 ads. Wow, what a difference. It's clear that the unlimited data plan Verizon started offering to stem subscriber losses is working as the company's, churn, a measure of people departing for other carriers, was very low. It looks like the company's gotten back into growth mode, a rather incredible 90-day turnaround.

This terrific Verizon number comes on the heels of a shockingly better-than-expected AT&T (T) number, where record low churn of 0.79% and a very good total addition of 2.3 million users surprised positively, although it still lost 89,000 net post-paid subs, which is the preferred metric from the group.

Still, all in all, the company handily beat earnings expectations, something we haven't seen in ages. It looks like the acquisition of Direct TV is really paying off as the synergies are really playing out. AT&T's been able to appeal to Direct TV users to take AT&T and vice versa. The company showed tremendous cost discipline and had record high margins. Now it awaits the closing of the Time Warner (TWX) deal where it will be able to tease new HBO customers to AT&T as it did with Direct TV.

These are huge comebacks for two companies that had become the whipping boys for John Legere, the brash CEO from T-Mobile (TMUS) . Do not get me wrong, T-Mobile is still showing astonishing growth. The Un-Carrier added 817,000 post-paid subs, which while down slightly from 1Q, was almost double the estimate analysts were looking for and far better than Verizon or AT&T.

That's fine, and T-Mobile's been a great stock. I have been 100% behind it for what remains a historic run. Legere remains one of my favorite CEOs and he and his team continue to trump everyone else. But, and this is an important but, John has historically poked fun at both Verizon and AT&T asking, in a spoof on a hilarious movie, which one is dumb and which one is dumber.

They both may still be dumber than T-Mobile, which is growing like crazy, but what I find intriguing is that if both AT&T and Verizon are in growth modes, their stocks, barring a takeover for T-Mobile, might be better buys. I think the which one is dumb and which one is dumber joke can now be retired. It drove home the point, but both AT&T and Verizon look like smart investments to me.

AT&T's stock, even after yesterday's gigantic gain and today's 3% increase, remains very cheap on these new numbers. Plus, it still yields 5%, which is terrific for income-seekers.

Verizon's 4.89% yield is also fantastic and for the first time in several years I can argue that it could go higher not because of stock depreciation but because the company can handily boost the dividend.

I think that the reason T-Mobile's stock did not fly on its better-than-expected quarter is that the empires of the old world are striking back. Now they are not un-carriers; they are not cool in any way shape or form. But as investments? They are back to being among the best and their stocks are open for business for all who need income and not just the capital appreciation that I think T-Mobile will continue to give you.

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