These telecom giants that haven't done too much in recent years just made Josh Brown's list

Verizon is guiding free cash flow to $21.5B+ in 2026 (FCF trough $14.1B in FY2022) after a strong quarter with 551k consumer phone adds in Q4 and FY revenue of $138.2B (+2.5%); the board approved up to $25B in buybacks and the dividend was raised to a 5.62% yield. AT&T reported FY FCF of $16.6B and guidance of $18B+ for 2026, with 1.5M net phone adds, 1M fiber net adds (10.4M fiber subs) and a 42% convergence rate; it returned >$12B to shareholders in 2025 and is forecasting double-digit adjusted EPS CAGR through 2028. Both names have seen strong post-earnings technical follow-through (VZ digesting above ~$50 with key support at the 50-day ~$47/200-day ~$43; T building a base under $30 with 50-day ~$27/200-day ~$26.50), suggesting stock-level reactions of 1–3% on these fundamentals and buyback/dividend actions.

Analysis

This move toward telecoms is less about phones and more about duration arbitrage: investors are rotating into predictable cashflow exposed to secular demand for low-latency, high-capacity connectivity (AI/edge, cloud offload) while pricing in a return to shareholder-friendly capital allocation. Second-order beneficiaries include optical-gear vendors, tower landlords and regional fiber builders whose revenue is de-risked by large, long-term build programs; conversely, legacy cable broadband incumbents face accelerated churn where fiber penetration increases, pressuring their high-margin bundles.

Key risks are tactical and structural. Tactically, promotional escalation from a low-cost competitor or a renewed handset subsidy cycle could compress ARPU and slow FCF recovery within a quarter or two; structurally, sustained higher rates or a material rise in materials/labor costs for fiber builds would widen capex-to-FCF ratios and reprice the sector. Regulatory and political optics around large buybacks after prior M&A missteps are non-linear catalysts — a consumer- or antitrust-driven intervention could crystallize downside rapidly.

From a technical/flow standpoint the recent price action reflects a classic momentum refurbish: institutions reducing duration mismatches by switching into high-yield equities. That makes near-term volatility asymmetric — downside is defined by trend support points (days–weeks), upside depends on multi-quarter realization of FCF improvements and buyback cadence (quarters–18 months). For portfolio construction, treat these names as income-with-growth candidates, not pure growth, sizing them to balance rate-sensitivity in our multi-strategy book.

Key Decisions for Investors

• Long VZ equity (12-month horizon): Buy a starter position sized to 1–1.5% of portfolio with a 12-month target of ~+15–25% total return if FCF and buybacks continue; tactical stop at -10% to control event risk from promo escalation.
• Directional options (6–12 months): Buy a modest call-spread on VZ to express asymmetric upside (limit premium outlay to 0.3–0.5% of NAV). Structure as long-dated call spread to cap downside and benefit from multiple expansion if cashflow surprises beat consensus.
• Pair trade to hedge wireless-cycle risk (6–12 months): Long VZ / Short TMUS (or Short a cable broadband leader) sized neutral dollar exposure. Rationale: capture relative resilience of FCF/share and buyback optionality against a competitor whose margin profile is more promo-sensitive; target 10–15% spread capture, stop if spread widens >20% from entry.
• Second-order play — long tower/fiber capex beneficiaries (12–18 months): Add high-quality tower REIT or optical-equipment supplier to capture stand-alone upside from continued fiber rollouts and densification. Size as a satellite position (0.5–1% of portfolio) with view to realize gains as visibility on multi-year build contracts firm up.