8 5G Stocks to Own in 2020

Posted on Thursday, January 30th, 2020 by MarketBeat Staff
8 5G Stocks to Own in 2020To understand 5G is to understand that the “G” stands for generation. Like the previous generations that came before it, 5G promises to enhance the way consumers and businesses experience the internet. Yes, 5G will certainly deliver faster connection speeds. But I wouldn’t be nearly as excited about this technology if it simply meant I could download a movie in seconds instead of minutes.

Where 5G offers the most intriguing benefit is in the way it promises to enhance our increasingly connected future. Autonomous cars, industrial automation, augmented reality (AR) and virtual reality (VR) will all be transformed by the increased speed and reduced latency of a 5G network.

One of the exciting aspects of 5G is the many ways investors can profit. There is an infrastructure being built to support the roll-out of this technology. It can’t just use the existing cell phone towers. There are also chips that have to be created to support mobile devices. The 5G revolution will also benefit software providers. And then, of course, there are the wireless providers who will be introducing 5G phones and tablets sometime in 2020.

Here’s the rub. The build-out of a 5G infrastructure is behind schedule. And some industry experts are suggesting the real growth from 5G may not come until 2021. But there’s no question that the infrastructure is being built now. And we’ve selected some stocks that look like they don’t already have the growth of the stock factored in.

#1 - Applied Materials (NASDAQ:AMAT)

Applied Materials logo

Applied Materials - Semiconductor chips are the engines that will power 5G devices. And that power will allow those devices to deliver data 10 times faster than 4G networks. With that in mind, it would make sense to invest in the company that helps build the engines. And that brings us to Applied Materials (NASDAQ:AMAT). Semiconductor companies are already racing to build the next generation of chips to support 5G. And that puts AMAT in an ideal position to capitalize.

For investors who put a value in such things, Applied Materials is the leading semiconductor fabrication tool supplier. And analysts believe that the company’s revenue will increase by 12.5% year-over-year in 2020. This would virtually erase the 13% drop in the company’s top line in fiscal 2019. As evidence of this turnaround, the company is forecasting a 9% increase in sales for the current quarter ($4.1 billion vs. $3.75 billion) on a year-over-year basis.

And the gains from 5G do not appear to be factored into the AMAT stock price which is trading at 16 times forward earnings estimates.

About Applied Materials
Applied Materials, Inc engages in the provision of materials engineering solutions used to produce new chip and advanced display. It operates through the following segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment includes semiconductor capital equipment for deposition, etch, ion implantation, rapid thermal processing, chemical mechanical planarization, metrology and inspection, and wafer level packaging.Read More 

Current Price: $144.52
Consensus Rating: Buy
Ratings Breakdown: 21 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $153.96 (6.5% Upside)



#2 - Crown Castle International (NYSE:CCI)

Crown Castle International logo

Crown Castle International (CCI) - Crown Castle International (NYSE:CCI) is a real estate investment trust (REIT) that owns and leases much of the cellular infrastructure that enable mobile data traffic and access to the internet from mobile devices.

As I mentioned in the introduction, the current cellular infrastructure will not be sufficient to support 5G technology. One example is the small cell towers that will have to connect to streetlights, buildings, or poles that supplement a cell tower. And one of the key areas that CCI invests in is the small cell towers.

This is significant because small cell towers address the one limitation of 5G technology. The tradeoff for getting an ultrafast connection is that the connection has a very limited range. This means that there will need to be a massive amount of small cell towers throughout the country. CCI leases out 65,000 of these small cell towers.

So far in 2020, CCI stock is up over 5%, and has risen over 31% in the last twelve months. But beyond this organic growth, CCI is also a great dividend stock. The company has delivered 5 consecutive years of dividend growth. And because the company is a REIT, it pays at least 90% of its earnings to shareholders as dividends.

About Crown Castle International
Crown Castle International Corp. is a real estate investment trust company, which engages in the provision of access to wireless infrastructure via long-term contacts. It operates through the following segments: Towers and Fiber. The Towers segment offers access, including space or capacity towers dispersed throughout the United States.Read More 

Current Price: $194.61
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $196.18 (0.8% Upside)



#3 - Intel (NASDAQ:INTC)

Intel logo

Intel (INTC) The 5G revolution go beyond what they will mean for mobile devices. This new technology will increase the demand for data centers and companies involved in the internet of things (IoT). Intel (NASDAQ:INTC) is positioned well in both of these spaces.

Intel has been an interesting story for those that believe an old dog can learn new tricks. Since 2016, Intel has done what a good investor does, diversify. As a result, the company is less dependent on its core PC business, which is getting a little long in the tooth. In fact, by 2021, the company estimates the weight that PCs carry in their business will decrease nearly 60% from 2017.

And while investors had to be patient, their patience seems to have been rewarded. Intel is beginning to post impressive data center growth which should only increase as the 5G roll-out continues. And despite the pivot in their business, Intel remained a reliable dividend stock. The company’s current dividend yield is around 1.8% and, spurred by growth from 5G, the company should be in a position to increase its dividend in the next few years.

About Intel
Intel Corp. engages in the design, manufacture, and sale of computer products and technologies. It delivers computer, networking, data storage, and communications platforms. The firm operates through the following segments: Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), Programmable Solutions (PSG), and All Other.Read More 

Current Price: $54.29
Consensus Rating: Hold
Ratings Breakdown: 12 Buy Ratings, 11 Hold Ratings, 11 Sell Ratings.
Consensus Price Target: $59.86 (10.3% Upside)



#4 - Qualcomm (NASDAQ:QCOM)

QUALCOMM logo

Qualcomm (QCOM) With friends like Apple (NASDAQ:AAPL), Qualcomm (NASDAQ:QCOM) doesn’t need enemies. But it appears that the two companies have put aside their very public spat that had investors questioning if Qualcomm would be providing modems for Apple’s iconic iPhone. And let’s face it that is a major tailwind for QCOM stock in 2020.

Apple got unexpectedly strong sales for its iPhone 11 Series. But the real boom is going to come from 5G. Consumers will not be able to access the benefits of 5G on their mobile devices without a phone that is equipped to connect to 5G. And unlike the transition from 3G to 4G, this transition will require them to get a new device.

Qualcomm will be providing the modems for this new generation of iPhones. And in December 2019, Qualcomm’s president Cristiano Amon emphasized that launching Apple’s first 5G phone “as fast as we can” is the company’s top priority.

There is some concern that the stock, which jumped 90% in 2019, may already reflect the majority of the growth from 5G. And Apple may still develop an in-house solution that would be damaging to Qualcomm. However, a significant portion of the 5G growth is happening now and Qualcomm is in a position to see its stock price jump.

About QUALCOMM
QUALCOMM, Inc engages in the development, design, and provision of digital telecommunications products and services. It operates through the following segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on technologies for the use in voice and data communications, networking, application processing, multimedia, and global positioning system products.Read More 

Current Price: $151.73
Consensus Rating: Buy
Ratings Breakdown: 18 Buy Ratings, 11 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $167.54 (10.4% Upside)



#5 - Ericsson ADR (NASDAQ:ERIC)

Telefonaktiebolaget LM Ericsson (publ) logo

Ericsson ADR (ERIC) - Network upgrades are another area that will require an upgrade to accommodate 5G technology. Investors have another best-in-class option with Ericsson ADR (NASDAQ:ERIC). The Swedish-based company is currently partnering with TDC to launch the first 5G network in Denmark. This could be the test case for other 5G networks around the globe.

One thing that makes Ericsson attractive is that it is priced under $8 per share. From a trading perspective it is approaching the lower end of its 52-week low ($7.58) and has some room to go before hitting its 52-week high ($10.46). But the stock gave up much of the prior 3-month gains when it posted disappointing earnings.

That is not discouraging some analysts. In fact, Citi analyst Amit Harchandani said he expects consensus 2020 EBIT to move lower by 5%-10% on the higher operating expenditure.

“While a weaker quarter was widely anticipated...we would be buyers of any sustained weakness as we see multiple reasons for optimism beyond the headline metrics.”

About Telefonaktiebolaget LM Ericsson (publ)
Telefonaktiebolaget LM Ericsson (publ), together with its subsidiaries, provides communication infrastructure, services, and software solutions to the telecom and other sectors. It operates through four segments: Networks, Digital Services, Managed Services, and Emerging Business and Other. The Networks segment offers hardware, software, and related services for radio access and transport, as well as related services, such as design, tuning, network rollout, and customer support.Read More 

Current Price: $11.70
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $15.84 (35.4% Upside)



#6 - Cisco Systems (NASDAQ:CSCO)

Cisco Systems logo

Cisco Systems (CSCO) - Cisco (NASDAQ:CSCO) is another example of a company that has reinvented itself. The former hardware intensive company has pivoted to a software-as-a-service (SaaS) model. This puts it in a sweet spot to support the growth in artificial intelligence and IoT applications that will come with 5G technologies.

Cisco hardware and software will be used to protect connections and networks. The company is looking to build off its best fiscal year in 5 years (relative to sales and net income). Plus the company recently unveiled its Cisco 5G Power x.  According to the company, this is an architecture that can used by any cellular, Wi-Fi, or internet protocol.

And Cisco is coming its strongest fiscal year in recent years and is displaying strong financials. The company’s adjusted earnings per share (EPS) has grown over sevenfold since dipping below $10 in 2002. The company also has a digestible P/E ratio of 19.4 (at one point it was over 200).

About Cisco Systems
Cisco Systems, Inc engages in the design, manufacture, and sale of Internet Protocol based networking products and services related to the communications and information technology industry. The firm operates through the following geographical segments: the Americas, EMEA, and APJC. Its product comprises of the following categories: Switches, Routers, Wireless, Network Management Interfaces and Modules, Optical Networking, Access Points, Outdoor and Industrial Access Points, Next-Generation Firewalls, Advanced Malware Protection, VPN Security Clients, Email, and Web Security.Read More 

Current Price: $55.89
Consensus Rating: Buy
Ratings Breakdown: 10 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $52.33 (6.4% Downside)



#7 - VMware (NYSE:VMW)

VMware logo

VMware (VMW) VMware (NYSE:VMW) is a software developer that is a leader in the emerging hybrid cloud. This is software that will allow carriers to run on multiple networks at the same time on the same hardware.

One of the key phrases in the hybrid cloud model being adopted by VMware is “open source technology.” IBM (NYSE:IBM) became the undisputed leader in open source container applications with its expensive $34 billion purchase of Red Hat in 2019. This gave IBM access to Red Hat’s OpenShift Kubernetes platform. VMware’s response is a $2.7 billion purchase of Pivotal Software. This is a move that VMware CEO Patrick Gelsinger said gives the company better assets for far less cost.

VMware is projecting year-over-year earnings growth between 3% and 6% in 2020. That would be welcome news to investors who are watching a stock that has dropped 25% from its 52-week high set in May 2019. But so far, 2020 has brought a lack of clear direction. Instead of participating in the market melt up like other tech stocks, VMW shares are down about 5% since the start of the year. And much to the chagrin of some traders, the stock is struggling to push above a support level at $150.

About VMware
VMware, Inc provides software in the areas of hybrid and multi-cloud, modern applications, networking, security, and digital workspaces in the United States and internationally. It offers VMware multi-cloud solutions, including VMware vSphere, a data center infrastructure that provides the fundamental compute layer and utilizes its hypervisor software, a layer of software that resides between the operating system and system hardware to enable compute virtualization; vSAN and VxRail, which offers holistic data storage and protection options to all applications running on vSphere; and vRealize Cloud Management solutions that manages hybrid and multi-cloud environments running in virtual machines and containers, as well as VMware Cloud Foundation, a hybrid cloud platform that combines its vSphere, vSAN, and NSX with vRealize Cloud Management into an integrated stack and delivers enterprise-ready cloud infrastructure for private and public clouds.Read More 

Current Price: $154.08
Consensus Rating: Hold
Ratings Breakdown: 7 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $173.00 (12.3% Upside)



#8 - AT&T (NYSE:T)

AT&T logo

AT&T (T) Finally, we get to the companies that will be putting 5G technology in the consumer’s hands. For me, aside from Apple which is an entity unto itself, comes down to AT&T (NYSE:T) and Verizon (NYSE:VZ). At this point, I give the nod to AT&T.

This is because what some analysts see as a weakness for the stock, I view as a strength. With the acquisition of content from Time-Warner, the company will be entering the streaming wars. Critics will say that with DirecTV the company is entrenched in a dying industry. And with Time-Warner they are arriving late to the game with a streaming product that will not have the content consumers want.

But the one thing both of these acquisitions give AT&T is a degree of stickiness. A consumer can bundle wireless service, DirecTV, and (in select markets) home internet. Now they add the ability to deliver streaming content. This is a tactic already being used by Disney (NYSE:DIS) and Apple. Inertia is a funny thing and AT&T seems to be building a moat that will make customers think twice about switching.

About AT&T
AT&T, Inc is a holding company, which engages in the provision of telecommunications media and technology service. It operates through the following segments: Communications, WarnerMedia, and Latin America. The Communications segment provides services to businesses and consumers located in the U.S., or in U.S.Read More 

Current Price: $28.23
Consensus Rating: Hold
Ratings Breakdown: 7 Buy Ratings, 7 Hold Ratings, 3 Sell Ratings.
Consensus Price Target: $31.01 (9.8% Upside)

 

According to the research firm Gartner, 5G wireless infrastructure will increase to $4.2 billion in 2020. So even if the next generation of phones doesn’t arrive on schedule, the 5G train has left the station. And that means there’s plenty of opportunity for investors both in 2020 and beyond. If you take nothing else from this presentation, it should be this. 5G is not a bubble. It’s not a trend. It’s an inevitable evolution. To paraphrase a cliché, it’s become too important to fail. I’ve seen “5G” pop up on my phone when I’ve traveled to a number of cities.

This means the infrastructure is already here, if only on a limited basis. And that infrastructure is moving from the outside in – as in the palm of your hand.

Many of these companies will be delivering (or have already delivered) earnings. When analysts get a chance to digest those numbers, the big money may start to make these stock prices look less attractive. And when that happens, it may be too late. That’s why it’s important that you act now.

And remember, as a MarketBeat member, you’ll be able to get instant alerts on news that affects the stocks you’re either investing in or have on your watch list.

7 Stocks That Can Help You Profit From Summer Shortages

One of the lingering impacts of the Covid-19 pandemic is the supply chain disruptions that continue to bedevil many sectors. By now, every investor is aware of the global chip shortage that is disrupting many sectors that were projected to have strong growth in 2021.

But there are many more sectors that are being affected by supply chain disruptions. And this affects everything from big-ticket items like cars to everyday items like pet food and even bacon.

The focus of this special presentation is seven companies that stand to benefit from the current disruption in the supply chain. All of these companies delivered strong gains in 2020. Some of them have weakened in 2021, but that was before the full extent of the supply chain weakness was discovered.

As the economy reopens, the shortage of items is likely to continue and become much more notable. When they do, many of these stocks may get overpriced. That’s why now is the time to get in on these stocks that can help you work the supply chain in your favor.

View the "7 Stocks That Can Help You Profit From Summer Shortages" Here.





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