In this article we will take a look at the 10 best communication stocks to buy now. You can skip our detailed analysis of the communications sector’s outlook for 2021 and some of the major growth catalysts for communication stocks and go directly to the 5 Best Communication Stocks to Buy Now.
The global communications sector initially consisted of just a few major players. It has now become a much more decentralized market as new opportunities emerged within the telecom industry. The industry has many functions involved including IT, construction, and AI which has opened up many business opportunities for communication companies to take advantage of. According to the Business Research Company, the telecom market size is expected to reach $3450 billion by 2022, growing at a CAGR of around 6%. This growth can be attributed to increasing development of smart cities and emerging market growth across the world.
Growth Catalyst for Communication Stocks: 5G
Perhaps the most important trend in the communications sector is the evolution of the next generation superfast 5G network technology which is already commercially available across 24 countries in the world through 40 mobile operators. Pioneering countries included South Korea, United States, Switzerland, China, and Kuwait. The major communication companies in the world such as Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), and Vodafone Group Plc (NASDAQ: VOD) are aiming to be on the forefront of the 5G revolution, capitalizing from the widespread adoption of the latest wireless technology. Verizon Communications Inc. (NYSE: VZ) has partnered with Ericsson L M Telephone Co (NASDAQ: ERIC) to help upgrade their core network and make it capable of managing 5G speed and communication upgrades. Other network providers such as T-Mobile US, Inc. (NASDAQ: TMUS) and AT&T Inc. (NYSE: T) are also leading the way in the 5G movement.
According to GSMA Intelligence, 150 million 5G network connections were established by the end of 2020. Billions of people around the world were confined to their homes after the pandemic and became reliant on wireless and broadband access. Digital transformation was recognized as the only way forward to alleviate the economic pressures of the COVID-19 pandemic.
5G has the potential to reshape the communications industry with significantly higher speeds and capacity which can allow huge amounts of data to be downloaded in a matter of seconds. Moreover, it will also play an important role by powering other technologies that will revolutionize travel, learning and innovation across the world. From the internet of things to smart homes, self-driving cars, telemedicine, virtual and augmented reality and everything in between, the wide-scale deployment of the 5G network will drive the reinvention of several businesses and consumer applications. An IHS Markit Ltd. (NYSE: INFO) report estimates that 5G will boost the global economic output by $12.3 trillion by 2035.
According to the Business Research Company, the adoption of advanced technologies and growing government initiatives during the pandemic have increased the scope and potential of the global telecom market. It is forecasted that the telecommunications market size will gain the most in China at $230.5 billion by 2022. Moreover, the top opportunities will arise in the wired telecommunications carriers’ segment which will gain $338.8 billion of global annual sales by 2022.
As digitalization is occurring across industries, there is a growing demand for connected devices, increased processing power, and wider network coverages which is driving the growth of the communications sector. Enterprises are deploying IoT to achieve cost savings and generate new revenue. Verizon Communications Inc. (NYSE: VZ) is providing businesses with Internet of Things connectivity in 170 countries worldwide. In 2020, 7.9 billion mobile connections are forecasted to increase to 8.6 billion by 2025. There will be 600 million new added connections in which two-thirds of it are coming from Asia Pacific and Sub-Saharan Africa.
The market size of the wireless communications carriers’ industry is estimated to be approximately $278.8 billion in 2021. In a world where connectivity has become an essential part of life, many communication companies in the US are taking this opportunity to innovate and introduce new services to the communications market. These communication companies have also benefited from the COVID-19 pandemic as more people made the shift to digitization and wireless communication services. With double-digit growth in revenues, it is an exciting time for the communications sector, especially for investors.
Just like the communications industry, the hedge fund industry is also seeing winds of change. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Let’s now take a look at the 10 best communication stocks to buy now.
Best Communication Stocks to Buy Now
10. Altice USA, Inc. (NYSE: ATUS)
Number of Hedge Fund Holders: 56
Market Cap: $17.289 billion
Altice USA, Inc. (NYSE: ATUS) provides broadband communications and video services in the United States, Canada, Puerto Rico, and the Virgin Islands. It offers broadband, video, telephony, and mobile services to approximately 5 million residential and business customers. The company was incorporated in 2015 and is headquartered in Long Island City, New York. Altice recently announced the launch of its Smart WiFi 6 which is optimized for Optimum and Suddenlink’s fiber-rich network. The Smart WiFi 6 has faster speeds and greater coverage. Altice USA, Inc. (NYSE: ATUS) has reported a revenue growth of 1.2% year-over-year in the first quarter of 2021 which totals $2.48 billion. Net income attributable to stockholders was $274.1 million in Q1 2021, or $0.58 per share on a diluted basis, compared to a net loss of ($0.9) million in Q1 2020, or $0.00 per share on a diluted basis. The company also completed its acquisition of Morris Broadband which will expand Altice’s USA footprint in North Carolina. The current consensus among 25 polled investment analysts is to Buy Altice USA, Inc. (NYSE: ATUS) according to CNN Business making it one of the best communication stocks to buy now.
In one of its investor letters, Greenlight Capital highlighted a few stocks and Altice Usa Inc. (NYSE:ATUS) is one of them. Here is what Greenlight Capital said:
“We also exited Altice USA with a 36% gain over two years. The company executed on cost-cutting and growth strategies and repurchased a significant amount of shares at attractive prices. We sold over concern about the 2020 advertising environment and potential broadband regulations.”
9. Rogers Communications Inc. (NYSE: RCI)
Number of Hedge Fund Holders: 15
Market Cap: $25.94 billion
Rogers Communications Inc. (NYSE: RCI) is a communications and media company that is based in Canada. It is headquartered in Toronto and operates through three segments: Wireless, Media, and Cable. The company has made our list of the best communication stocks to buy now due to its solid performance despite the continued pandemic lockdown environment. Rogers delivered strong execution and operational improvements in all its three segments in 2020. There was an addition of 44,000 wireless postpaid net subscribers and the expanded wireless adjusted EBITDA service grew by 310 basis points. Moreover, the Cable service segment experienced a revenue growth of 5% during the previous year. The total revenue for the company was $13.9 billion at the end of 2020. Rogers Communications Inc. (NYSE: RCI) has continued its efforts to expand its wireless service to more rural areas across Canada, providing 5G services to over 173 communities. It was ranked as the most reliable 5G network in Canada. Rogers Communications Inc. (NYSE: RCI) paid $252 million in dividends to their shareholders and declared a quarterly dividend of $0.50 per share on April 20, 2021. Its shares have added about 5.6% of value since the beginning of 2021 which makes it one of the best communication stocks to buy now.
At the end of the fourth quarter of 2020, 15 hedge funds in the database of Insider Monkey held stakes worth $279 million in RCI.
8. TELUS Corporation (NYSE: TU)
Number of Hedge Fund Holders: 14
Market Cap: $29.323 billion
TELUS Corporation (NYSE: TU) provides telecom and IT products and services in Canada. The company was founded in 1993 and is headquartered in Vancouver. It operates through two segments: Wireless and Wireline. Recently, TELUS Corporation (NYSE: TU) announced that it is planning to accelerate the deployment of PureFibre infrastructure and fast track the process of national 5G network rollout. TELUS Corporation (NYSE: TU) is poised to benefit from the increasing penetration of smart devices in the country. TELUS’s superior network speed, strength, and reliability has been recognized by industry-leading experts and was even included in the Q1 2021 Speedtest Intelligence report by Seattle-based Ookla. TELUS Corporation (NYSE: TU) is investing $54 billion in infrastructure and operations till 2024 to create a wider network access throughout the country. By the end of 2021, 529 new Canadian communities will have access to TELUS’ blazing fast 5G network. The company reported a strong first quarter in 2021 with a revenue of $505 million, up 57% year-over-year. Adjusted EBITDA was $129 million, up 90% year-over-year while the diluted EPS was $0.23.
Like T-Mobile US, Inc. (NASDAQ: TMUS) and AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), TU is one of the best communication stocks to buy now.
TELUS has a positive outlook for double-digit revenue growth in 2021 due to its strong operating momentum. Hence, it has secured the number 8 spot in our 10 best communication stocks to buy now list.
7. BCE Inc. (NYSE: BCE)
Number of Hedge Fund Holders: 13
Market Cap: $44.435 billion
BCE Inc. (NYSE: BCE) is a Canadian telecommunications and media company that provides internet, wireless, wireline, and television services across Canada. It owns approximately 35 TV stations, 3 streaming services, and 109 licensed radio stations. Formally known as Bell Enterprises, the company recently announced the acquisition of Montreal’s Octane Racing Group which is the largest annual sports and tourism event in Canada. BCE Inc. (NYSE: BCE) had a strong first quarter in 2021 as its broadband additions, revenues, and network acceleration program drove the company’s momentum. Quarterly adjusted net income came in at $555.9 million or $0.62 per share. Canada. BCE Inc. (NYSE: BCE) also added 108,468 new mobile retail internet customers which is up 51% year over year. The company also announced investments of more than $1 billion to accelerate its broadband network program which is on track to reach up to 6.9 million customers by the end of 2021.
Despite uncertainties related to the COVID-19 pandemic, BCE Inc. (NYSE: BCE) expects revenues and adjusted EBITDA to grow between 2% and 5% and adjusted EPS is projected to grow between 1% and 6% in fiscal year 2021. BCE ranks 7th in our list of the best communication stocks to buy now.
Like AT&T Inc. (NYSE: T), and Vodafone Group Plc (NASDAQ: VOD), T-Mobile US, Inc. (NASDAQ: TMUS) and Verizon Communications Inc. (NYSE: VZ), BCE is one of the best communication stocks to buy now.
At the end of the fourth quarter of 2020, 13 hedge funds in the database of Insider Monkey held stakes worth $90.7 million in BCE Inc. (NYSE: BCE) which is an increase from 10 hedge funds in the previous quarter holding stakes worth $84.6 million.
6. Vodafone Group Plc (NASDAQ: VOD)
Number of Hedge Fund Holders: 17
Market Cap: $55.83 billion
Vodafone Group Plc (NASDAQ: VOD) is a telecommunication services company that operates in Europe and internationally. It was founded in 1984 and is headquartered in Newbury, United Kingdom. The company offers mobile services that enable customers to call, text, and access data; fixed line services, including broadband, television (TV) offerings etc. It has a strategic partnership with Alphabet Inc. (NASDAQ: GOOG)’s Google to jointly develop data services and a system called Dynamo which can extract and transport data across various countries. Vodafone Group Plc (NASDAQ: VOD) is planning to rake in $2.4 billion from an IPO of its European mobile-phone towers unit in Frankfurt, which is one of the region’s biggest listings in 2021 according to Bloomberg.
The total revenue for the company in 2020 amounted to $56.4 billion up from $53.05 billion in 2019 and has a diluted EPS of $1.04. According to CNN Business, The current consensus among 18 polled investment analysts is to buy Vodafone Group Plc (NASDAQ: VOD) making it one of the best communication stocks to buy now.
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Disclosure: None. 10 Best Communication Stocks to Buy Now is originally published on Insider Monkey.
