The BT share price dives 20% in 6 months. What next in 2022?

The BT share price has swung between 120p and 207p over the past 12 months and is down 20% in six months. But I see recovery potential in 2022-23.

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It’s been an interesting year for shareholders in former telecoms monopoly BT Group (LSE: BT.A). The BT share price has zigzagged wildly in 2021, soaring between March and June, before crashing back to earth by late October. But what do I think might happen to this popular stock in 2022?

The BT share price oscillates wildly

Nearly five years ago, the share price was riding high, closing at 391.75p on 13 January 2017. It then began a multi-year slide, ending 2017 at 271.7p, before closing 2018 at 238.1p and 2019 at 192.44p. What’s more, BT shares were on something of a roller-coaster ride in 2020. They ended the year at 132.25p, having hit a Covid-battered low of 94.68p earlier in the year.

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On 26 February 2021, BT shares had slipped to close at 123.55p, down 8.7p (-6.6%) this year. But then the shares enjoyed one of their strongest surges in years, as the price climbed relentlessly higher. Four months later, the stock hit its 2021 high of 206.7p on 23 June. At this point, BT shares had added 74.45p — soaring by more than half (+56.3%) — in under six months.

However, what goes up often comes down, so BT stock underwent yet another collapse. Just over four months later, the shares closed at 135.2p on 25 October, having gained less than 3p (+2.2%)  in 2021. Looking at the BT share price chart, it resembles an upside-down V between March and November. Oh dear.

BT stock bounces back again

On Thursday, the BT share price closed at 166.3p, up 2.5p (+1.5%) on the day. Since 25 October, this stock has rebounded by 31.1p, surging by 23%. On 31 October, with the shares standing at 138.93p, I said that BT was a fallen angel with growth potential. Hence, I said that I would buy at this price. I know it has been a frustrating stock to own for most of the past five years. It’s lost 19.1% over six months, gained 20% over one year, slumped 34.9% over three years, and crashed by 55.1% over five years. But I see potential for recovery at BT in the coming years, perhaps leading to a re-rating of its shares.

I’d buy BT today

At current levels, BT shares trade on a price-to-earnings ratio of 15.9 and an earnings yield of 6.3%. But analysts expect these fundamentals to improve in 2022-23, as it cuts costs and pension contributions. Also, BT cancelled its dividend in May 2020, its first suspension in 36 years. But the cash payout has now been restored at a proposed 7.7p a share for 2021-22. That equates to a dividend yield of 4.6% a year, above the FTSE 100’s 4% yield.

BT is worth £16.3bn today. If I had this sum, would I buy the business? I would, which is why I would also buy stock at its current price. Interestingly, French-Moroccan billionaire Patrick Drahi agrees with me, having built up an 18% stake in BT over the past six months. I know that the firm has fumbled and stumbled along for years, but I suspect it can look forward to a brighter future. For me, it might be the ideal combination of an income-generating value stock with a potential growth kicker. If BT can successfully restructure to focus on 5G telecoms networks and full-fibre internet, it could be a great stock to own in 2022 and onwards. But I’d expect a rather bumpy ride!

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

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