As the rollout of 5G, or fifth-generation wireless internet continues, there are many types of 5G stocks you can buy for exposure to this advancement in wireless telecommunications technology.
For scores of companies across many areas of the telecom and technology sectors, 5G represents a strong growth opportunity. The companies producing 5G components and hardware will benefit from increased demand for these products.
Mass adoption of 5G bodes well for owners of telecommunications infrastructure, namely cell tower real estate investment trusts as well. The telecommunications providers offering 5G service to businesses and consumers stand to benefit as well.
Yet while there are many 5G-exposed stocks to choose from, just hone in a few particular names. Yes, stock predictions are not certainties. Possible 5G catalysts may fail to arrive for all of them.
However, with the potential upside from the continued rollout of this technology in mind, the coming year could be a banner one for these seven 5G stocks.
Right now, the main point of interest with mobile chip and infrastructure software company Broadcom (NASDAQ:AVGO) may be its growth potential from the rising adoption of generative artificial intelligence and other types of AI-related technology.
“AI mania” has sent AVGO stock soaring throughout the year. Investors are betting big that the company, especially after it closes on its pending merger deal with VMware (NYSE:VMW), will be well-positioned to capitalize on this particular megatrend.
However, the rise of AI is not the only favorable trend in Broadcom’s corner. Broadcom also has much to gain from the 5G trend.
Trading for less than 20 times earnings, AVGO appears reasonably priced, given how the aforementioned trends/catalysts could lead to steady earnings growth in the years ahead.
Crown Castle (CCI)
Crown Castle (NYSE:CCI) is one of the leading cell tower REITs. As mentioned above, this sector stands to benefit from the 5G revolution, given the increased need for more cell towers to provide this service.
With this, CCI is not any more one of the 5G stocks than the other cell tower REITs.
So, why buy CCI stock, as opposed to peers like American Tower (NYSE:AMT) or SBA Communications (NASDAQ:SBAC)? Rising interest rates have hit cell tower REITs considerably hard over the past two years, but with CCI, the de-rating may be overdone.
Crown Castle has been pushed to a considerably lower valuation (12.1 times earnings). It sports a much higher dividend yield (6.8%) than AMT or SBAC .
While projected growth helps to explain this valuation gap, a modicum of 5G growth could be all it takes for Crown Castle to close this valuation gap.
With the U.S. looking to prevent China’s Huawei from dominating telecom technology in the West, both these companies have the edge when it comes to winning 5G supply deals in the U.S. and its allies.
That said, it may be Ericsson’s growth in developing economies that may give it the edge over Nokia. This year, a slowdown in 5G spending stateside has affected both companies. Both ERIC stock and NOK stock tumbled in July, due to weak results and guidance.
However, as InvestorPlace’s Alex Sirois pointed out last month, Ericsson is achieving success in faster-growing, less-established 5G markets such as India. Couple this emerging market success with a possible easing of the 5G spending slowdown domestically next year, and ERIC may be better-positioned to positively surprise.
Like with Ericsson, a slowdown in U.S. 5G spending has weighed on Corning (NYSE:GLW) recently.
Shares in the fiber optic cable and display glass company have moved slightly lower so far this year.
Yet while a frustrating turn of events for existing GLW stock investors, this pullback gives new investors the opportunity to buy one of the top 5G stocks at a favorable entry point. How so? At current prices, GLW trades for only 16.2 times earnings, and sports a 3.68% forward dividend yield.
At the same time, a likely resurgence in 5G capital expenditures, along with a rebound in smartphone demand, gives credence to analyst forecasts calling for Corning’s earnings to bounce back next year, and keep climbing in the years ahead.
Investors looking for a 5G play that offers a solid combination of value, growth potential, and yield should look at GLW.
Stock predictions for Quorvo (NASDAQ:QRVO) aren’t exactly rosy right now. The slump in smartphone demand has the market lukewarm about the prospects of this telecom components maker.
However, when it comes to establishing a position, it may be to your advantage that sentiment for QRVO stock is not very bullish.
As a Seeking Alpha commentator argued last month, it is likely that this company, not Qualcomm (NASDAQ:QCOM), is now providing Apple with a mmWave 5G component used in 5G-enabled iPhones.
This points to considerably stronger revenue and earnings in the coming quarters. Analyst consensus already calls for a big earnings rebound, but results could come in much stronger than that. F
or instance, hitting the high end of analyst forecasts for the next fiscal year (nearly $10 per share) could propel QRVO (in a slump since 2021) back toward all-time highs (nearly $200 per share).
Skyworks Solutions (SWKS)
Skyworks Solutions (NASDAQ:SWKS) has held up well during 2023, but investors remain hesitant to bid back shares in this wireless semiconductor company.
Similar to Quovo, a slowdown in demand has weighed on Skyworks’ operating performance.
Still, I wouldn’t jump to the conclusion that SWKS stock has ceased to be one of the best 5G stocks out there. As Morningstar analyst Brian Colello argued in August, issues like software smartphone demand may be persisting, yet these headwinds will clear up over time.
SWKS currently trades for 11.7 times earnings. This low valuation suggests that sluggish results are here to stay.
However, any sort of growth resurgence could catch the market by surprise, resulting in an outsized move higher for the stock. With this, now may be the perfect time to go contrarian on Skyworks Solutions.
However, among the three, TMUS is likely your best bet.
Yes, TMUS stock is pricey. Shares trade for 18 times forward earnings, while T and VZ sport forward multiples in the single digits. Both of T-Mobile’s rivals also have high dividend yields, while TMUS does not pay a dividend.
However, both these “cheaper” names have performed poorly over the past five years, with both dropping by around 40% over the past five years.
In contrast, TMUS has more-than-doubled during this time frame. T-Mobile has been more successful at capitalizing on the 5G trend than “Ma Bell” and Verizon. Likely to stay a winner thanks to competitive advantages, TMUS is the way to play 5G among the telcos.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.