Top Ten Stocks to Watch
Stocks: Ticker Symbols
American Tower: AMT
Crown Castle: CCI
Digital Realty Trust: DLR
Marvell Technology: MRVL
Dell Technologies: DELL
Nokia Corporation: NOK
Analog Devices Inc: ADI
The emergence of 5G wireless networks has caught the attention of a number of industries from healthcare, education, manufacturing and commercial real estate. While a lot of focus is on AT&T, T-Mobile and Verizon’s race to be the first wireless carrier to deploy a true nationwide 5G network, there are other factors at play. Sure, 5G networks will create faster internet connections and allow for more reliable wireless connectivity, but it will take a lot of different equipment to make that happen, creating a number of potential investment opportunities along the way.
Keeping reading to learn more about 10 5G stocks to keep an eye on.
What is 5G?
5G is the fifth generation of cellular technology. It is designed to increase speed, reduce latency (the time it takes for data to travel from one point to another), and improve flexibility of wireless services.
The semiconductor company creates advanced wireless broadband technology and produces 5G modems. Analyst Tal Liani said Qualcomm saw a 114% growth in radio frequency (RF) revenue in the most recent quarter, courtesy of 5G deployments and millimeter wave rollouts, according to U.S. News & World Report. The growth trend is expected to continue to move at a fast pace in 2022. The company’s automotive silicon and Internet of Things (IoT) revenue growth has also been solid and look to remain solid in the long term, according to Liani.
The semiconductor device supplier is a “5G stock to watch” because of its exposure to 5G infrastructure development, according to analyst Vivek Arya. While not as well-known as its semiconductor stock contemporaries, Broadcom has delivered 75% gross margins and $13.77 billion in projected 2021 free cash flow—making it one of the biggest revenue generators in tech.
Glass and ceramics manufacturer Corning provides the fiber optic cabling necessary for 5G data to travel along the wired part of the internet. Telecommunication companies that provide 5G wireless service need to have more high-speed cable for their back-end networks, and Corning is one those companies’ top suppliers, The Motley Fool reports. Meanwhile, Corning is also moving into the small cell antenna arena, which is a critical piece of 5G systems. Corning will partner with Qualcomm to supply in-building wireless network equipment. Additionally, Corning is helping fix the issue of 5G signals having difficulty moving through solid objects like buildings.
Real Estate Investment Trusts—American Tower, Crown Castle and Digital Realty Trust
A number of benefits will be born from 5G, but the fifth generation of wireless still needs real estate to function. Meanwhile, towers and other fixed assets are necessary to broadcast 5G signals, which is where REITs like American Tower, Crown Castle and Digital Realty Trust come into play, according to The Motley Fool. Crown Castle and American Tower own and operate CRE buildings and cell tower sites that mobile networks and internet infrastructure will need to function. The REITs also create fiber optic networks that connect 5G small cell sites to the rest of the internet.
Digital Realty Trust, meanwhile, develops and acquires data centers and has telecom companies as clients that are building the physical assets that make 5G possible.
Marvell Technology, a data infrastructure semiconductor provider, plays a critical role in 5G deployment, according to Nasdaq. The company helps telecom carriers roll out their 5G networks worldwide and supplies chips to businesses such as Nokia and Samsung. Marvell’s stock has increased more than 35% since the beginning of 2021.
Meanwhile, Marvell announced in October that enterprises all over the world are deploying its Prestera Ethernet switch platforms incorporating Dent. These deployments allow Marvell Technology to help accelerate the Ethernet switching infrastructure build out in emerging apps like autonomous retail. Such an app would let retailers turn their physical stores into “smart” retail-connected locations. Marvell also acquired Innovium, a transaction that will let the company increase its leadership in the cloud and let it take part in the fastest-growing segment of the switch market with a cloud-optimized solution.
Nasdaq also reports that Dell Technologies looks to push further into the 5G arena by releasing new software. The company plans to leverage the Open Radio Access Network (O-RAN) that allows telecom carriers to use software to run network functions on computing hardware. Doing so could potentially free carriers from having to buy certain specialized 5G equipment.
“Could this be a game-changer for 5G technology in the long run? Well, only time will tell,” StockMarket.com’s Jonathan Phillip wrote for Nasdaq. “That said, it has drawn interest even from the U.S. government. We can all agree that everyone looks forward to the day 5G becomes accessible to everyone.”
Nokia, which provides mobile and fixed network solutions, placed 10th on Yahoo Finance’s 11 best 5G stocks to buy according to hedge funds. Investment advisory Cowen upgraded the company to “Outperform” from “Market Perform” in July and raised its price target due to belief that Nokia’s turnaround in terms of fortunes was in progress. Meanwhile, 26 hedge funds in Insider Monkey’s database had stakes worth $494 million in Nokia—a 21% increase from the previous quarter, according to Yahoo.
Although known for being a retail giant, Amazon Web Services is the company’s big profit driver, Kiplinger reports. Amazon’s cloud storage business could set it up to test self-driving fleets that operate on a 5G wireless network, potentially letting the company better automate its warehouses.
“AWS is uniquely positioned for enabling the grid of the future,” the company said. “With the scalability that can deliver dynamic load flows in near-real time, AWS can offer unprecedented insights to the grid operators of the future. With sophisticated AI/ML tools, AWS can carry the heavy lift of complex decision making in controlling these dynamic grids, where generation and load (electric vehicles) can itself be mobile too.”
Whether Amazon gets into the 5G game or not, the company will still benefit from its profitable combination of its e-commerce and AWS services.
“As the leader in two large and rapidly growing sectors (eCommerce & cloud), with an emerging high margin marketing business, Amazon remains well positioned in a recovery scenario given cloud services, marketing services and certain eCommerce categories/geographies are still in the early phases of development,” Stifel’s analysts, which rate the stock at Buy, said.
Google has started to release the 5G version of its Pixel smartphone, but that’s just the beginning of its entry into the fifth generation of wireless arena. The company also expanded its Anthos 5G ecosystem at the end of 2020, according to Kiplinger. Anthos, Google’s prior Cloud Services division, lets its software apps better use 5G networks. The software part of the operation is what could lead to higher profits for Google in the future, as well as a higher stock price.
“When 5G is available to them, enterprise customers can benefit from higher speeds and lower latency, and Anthos makes it very easy for these customers to then deploy an application once and scale it across networks, including to the edge – which is why we call it ‘the effortless edge’,” Amol Phadke, Google Cloud’s managing director, said in a release.
“5G needs the cloud more than the cloud needs 5G,” Reaves Asset Management’s Brian Weeks said.
Analog Devices Inc.
Analog Devices, which makes high-performance integrated circuits used in signal processing applications, is expected to gain RAN market share from China as the global 5G deployment moves along, according to Arya. Analog Devices acquired Maxim in September and the united company forecasts long-term annual sales of $10 billion, according to U.S. News and World Report.
Arya also projected Analog Devices’ free cash flow will double in fiscal 2022 and exceed $4 billion by fiscal 2023. He noted that investors should expect excess free cash flow to be paid back to investors via dividends and buybacks.
Bonus 5G stock to watch: Wireless Carriers
Companies that provide 5G infrastructure, equipment and technology are ideal for investors who want more concentrated portfolio exposure to 5G, according to The Motley Fool. That does not mean the companies that are deploying the actual 5G networks are bad investments, however. T-Mobile, AT&T and Verizon are all working tirelessly to deliver fast, reliable 5G service to their customers.
Verizon’s 5G Home Internet for example is currently available in 60 cities, while the carrier’s 5G Ultra-Wideband mobility in approximately 90 cities.
Meanwhile, AT&T has recently made moves to push it towards a turnaround. The carrier partnered with Frontier Communications to bring fiber optic connectivity to large enterprise customers outside of its current footprint. This will allow AT&T to reach these enterprise customers who are in markets where it does not own a fiber network. The deal also helps AT&T in terms of deploying its 5G mobility network.
AT&T also picked Ericsson to help build its 5G network in the U.S., which will help support its new C-band spectrum and its 5G standalone launch.
“This is significant as it will help AT&T to bring its 5G network to more consumers, businesses, and first responders across key industries,” Phillip wrote. “All things considered, could (AT&T) stock be a viable investment at its current price?”