In this article, we will discuss the 11 best 5G stocks to buy now. If you want to skip the detailed analysis of the 5G market and its evolution, go directly to 5 Best 5G Stocks to Buy Now.
5G is the fifth-generation technology standard for mobile networks. Its deployment began in 2019 and is gradually succeeding its predecessor, 4G. According to GSM Association, the 5G technology will have over 1.7 billion subscribers by 2025. Compared to 4G’s theoretical 400 Mbps speed, 5G technology has a speed of 20 Gbps at the high end.
In 2021, the global 5G services market was worth $64.54 billion, which is expected to reach $1.87 trillion by 2030 at a CAGR of 44.63%. The largest segment of the 5G services market lies in North America, while the Asia Pacific region is the fastest growing region.
Evolution
The 1G or first generation began with the briefcase-sized phones that allowed small conversations between limited individuals. The 2G technology used frequencies in the 1.9 GHz spectrum, allowing SMS, MMS, and voicemails. By 2001, the 3G technology was introduced, expanding the frequencies to a 2.1 GHz spectrum with multiple-input multiple-output as the core technology. 4G was introduced in 2009, which added frequencies in the 600 MHz, 700 MHz, 1.7 GHz, 2.1 GHz, and 2.5 GHz spectrums, and gave rise to HD gaming, streaming and video conferencing.
Finally, the 5G technology operates along three bands millimetre wave high-band, mid-band, and low-band. Its lower-end speed outperforms the 4G speeds by 6 times.
According to a report by Nokia Oyj (NYSE:NOK), nearly 66% of IT decision-makers are aware of 5G and 47% revealed that they have already started planning on it. Meanwhile, 30% are still waiting to understand the technology better before applying it.
Apple Inc. (NASDAQ:AAPL), Broadcom Inc. (NASDAQ:AVGO), and T-Mobile US, Inc. (NASDAQ:TMUS) are the key players in the global 5G market.
Our Methodology
These stocks were picked after a careful analysis of the key companies involved in the global 5G market. The stocks were picked keeping in mind their business fundamentals, analyst ratings, financial position and recent reports, and dividend history along with other key metrics.
The stocks have been listed according to their market capitalization in ascending order.
Best 5G Stocks to Buy Now
11. Skyworks Solutions, Inc. (NASDAQ:SWKS)
Market Cap as of August 8: $18.045 billion
Skyworks Solutions, Inc. (NASDAQ:SWKS) is an American company that manufactures semiconductors for Radio Frequency and mobile communications systems. The company supplies semiconductor chips to major 5G smartphone original equipment manufacturers, including Samsung and Xiaomi.
For Q3 2022, Skyworks Solutions, Inc. (NASDAQ:SWKS) posted an EPS of $2.44, outperforming estimates by $0.09 and representing a 13% YoY growth. The company’s revenue of $1.23 billion was in-line with estimates and increased 10.8% year over year. The company’s gross margin grew 60 bps from the same quarter in the previous year to 51.2% and exited the quarter with $662.2 million in cash, cash equivalents, and marketable securities. Skyworks Solutions, Inc. (NASDAQ:SWKS) expects revenues between $1.375 billion and $1.425 billion for Q4 2022, the midpoint representing a 14% sequential growth. The sequential growth of EPS is expected to be around 19% at non-GAAP diluted earnings per share of $2.90.
On August 4, Skyworks Solutions, Inc. (NASDAQ:SWKS) declared a 10.7% increase in its quarterly dividend to $0.62, payable on September 15. As of August 7, the dividend yield of the company is 2% with an annual dividend of $2.24. In Q2 2022, the company returned 129% of its free cash flow in dividends and share repurchases, valued at over $1 billion.
On August 5, Craig-Hallum analyst Anthony Stoss reaffirmed a Buy rating on Skyworks Solutions, Inc. (NASDAQ:SWKS) shares and lowered the price target to $160 from $180. Stoss believes that mobile weakness and supply chain issues will be offset by continued growth in Skyworks’ Broader Market portfolio.
Apple Inc. (NASDAQ:AAPL), Broadcom Inc. (NASDAQ:AVGO), and T-Mobile US, Inc. (NASDAQ:TMUS) are some of the significant names covering the 5G market along with Skyworks Solutions, Inc. (NASDAQ:SWKS).
10. Nokia Oyj (NYSE:NOK)
Market Cap as of August 8: $29.168 billion
Nokia Oyj (NYSE:NOK) is a Finnish IT and consumer electronics company. The company has over 72 live 5G networks and 189 deals. On July 28, the company announced its 5-year 5G deal with AST SpaceMobile, Inc. (NASDAQ:ASTS), which according to them is “the company building the first and only space-based cellular broadband network accessible directly by standard 4G or 5G mobile devices.”
For Q2 2022, Nokia Oyj (NYSE:NOK) reported an EPS of €0.10, compared to €$0.08 estimates. The company’s €5.9 billion revenue exceeded the estimates by €290 and represented an 11.1% YoY growth. The company had an operating profit of €564 million, compared to €484 million in the same quarter last year. The operating margin increased 50bps to 9.6% on a YoY basis. The company had a net cash balance of €4.5 billion at the end of the second quarter.
In Q2 2022, Nokia Oyj (NYSE:NOK) paid €113 million through dividends with the quarterly dividend 0f €0.02 per share and expects to pay €112 million in Q3 2022. By June 31, the company had bought back over 30 million shares worth €144 million and plans to return €600 million to shareholders in tranches over a period of two years.
On July 22, Deutsche Bank analyst Robert Sanders maintained a Buy rating on Nokia Oyj (NYSE:NOK) shares and increased the price target to €6 from €5.5.
9. Arista Networks, Inc. (NYSE:ANET)
Market Cap as of August 8: $38.32 billion
Arista Networks, Inc. (NYSE:ANET) is a California-based computer networking company. The company’s products include network operating systems and network switches. Arista Networks, Inc. (NYSE:ANET) started its 5G journey in 2019 to provide network platforms to the Korean SK Telecom’s 5G network.
At the end of Q2 2022, Arista Networks, Inc. (NYSE:ANET) posted an EPS of $1.08, $0.16 above the consensus. The company also made its first billion dollars plus revenue at $1.05 billion representing a 48.5% YoY growth and beating the estimate by $70.51 million. The second quarter’s gross margins were 61.9%. Furthermore, the company’s operating expenses were 21.6% of the revenue at $226.1 million. Due to its high revenue growth, Arista Networks, Inc. (NYSE:ANET) generated $425.5 million of operating income, which is equal to 40% of the company’s revenue. The company expects its Q3 revenues to be between $1.025 billion and $1.075 billion and a non-GAAP gross margin of 60% to 62%. The non-GAAP operating margin is expected to be around 39%.
On August 2, Evercore ISI analyst Amit Daryanani reiterated an Outperform rating on Arista Networks, Inc. (NYSE:ANET)’s shares and raised his price target to $145 from $135. The analyst revised the price target due to “another impressive beat and raise,” despite continued headwinds on the supply chain front. Daryanani considers the company a “Top Pick” and believes that Arista Networks, Inc. (NYSE:ANET) is well positioned to maintain a 30% revenue growth on a multiyear basis. He further added that the company is well-protected against supply chain issues compared to competitors.
8. Crown Castle Inc. (NYSE:CCI)
Market Cap as of August 8: $77.625 billion
Crown Castle Inc. (NYSE:CCI) is an American REIT mostly focused on shared communications infrastructure. In 2021, the company announced a long-term deal with Verizon Communications Inc. (NYSE:VZ) to support Verizon’s 5G ultra wide-band and 5G nationwide deployment. Majority of the company’s revenue comes from 5G pioneers such as Verizon Communications Inc. (NYSE:VZ), T-Mobile US, Inc. (NASDAQ:TMUS), and AT&T Inc. (NYSE:T).
In Q2 2022, Crown Castle Inc. (NYSE:CCI) had an FFO of $1.80, compared to $0.97 estimates. The revenue of $1.73 billion outperformed market consensus by $20 million. The adjusted EBITDA was $1.08 billion compared to $958 million in Q2 2021 and income from continuing operations surged to $421 million from $333 million a year ago. The free cash flow for the period dropped by 19.3% to $538 million and the company exited the quarter with $5.4 billion in liquidity. Crown Castle Inc. (NYSE:CCI) raised its FY2022 adjusted EBITDA guidance to $4.35 billion at the midpoint, which was priorly $4.33 billion.
On July 25, Crown Castle Inc. (NYSE:CCI) declared a $1.47 quarterly dividend per share, in line with the previous quarter’s payout. The dividend will be paid out on September 30 to the shareholders on record as of September 15. The company’s long-term dividend growth expectation is around 7% to 8% and it delivers a dividend yield of 3.3% as of August 7.
Here is what ClearBridge Investments had to say about Crown Castle International Corp. (NYSE:CCI) in its Q1 2022 investor letter:
“U.S. communications company Crown Castle International (NYSE:CCI) was the largest detractor from quarterly performance. Crown Castle is the leading independent owner and operator of wireless communications infrastructure in the U.S. with a portfolio of approximately 40,000 towers. The stock underperformed as, driven by rising interest rates, investors rotated away from defensive into more value-oriented sectors. Communications infrastructure remains attractive, however, as companies continue to deploy greater capital spend to support the strong tailwinds from 5G.”
7. American Tower Corporation (NYSE:AMT)
Market Cap as of August 8: $127.11 billion
American Tower Corporation (NYSE:AMT) is a global real estate investment trust that owns and operates wireless and broadcast communications infrastructure. The company is expected to capitalize highly on 5G, the Internet of Things (IoT), and NEXTGEN TV technologies with over 43,000 towers in prime locations across the U.S.
For the second quarter of 2022, American Tower Corporation (NYSE:AMT) reported an FFO of $2.51, compared to $2.46 estimates. The company also exceeded the revenue estimates. Furthermore, the company’s property revenue reported a 17.1% growth to $2.6 billion and consolidated AFFO reported an 8.8% growth to $1.19 billion. American Tower Corporation (NYSE:AMT) also guided its FY2022 property revenue to $10.28 billion-$10.46 billion from $10.295 billion-$10.475 billion
American Tower Corporation (NYSE:AMT) has increased its dividend for the past 27 quarters consecutively. As of August 7, the dividend yield of the company is 2.1% and the dividend growth CAGR stands at 15% for the past 3 years. The previous quarterly dividend was paid out on August 7 to the shareholders of record on June 17.
Here is what Richie Capital Group had to say about American Tower Corporation (NYSE:AMT) in its Q2 2022 investor letter:
“The portfolio positions that increased during the quarter likely did so because of the sectors in which they are categorized as opposed to any company specific news. American Tower (NYSE:AMT) is one of the largest global REITs. The company owns and operates multi-tenant cell towers globally. Our long tenured investment is based on their impenetrable business model and the long tail of the current 5G investment cycle that will extend over the next decade. Carriers are in the early stages of upgrading their cell sites with new equipment to provide contiguous 5G coverage globally. Additionally, since 5G technology requires increased cell site density, cellular carriers will need to invest extensively to ensure strong performance across their networks.”
6. AT&T Inc. (NYSE:T)
Market Cap as of August 8: $128.304 billion
AT&T Inc. (NYSE:T) is an American telecommunications company founded by the inventor of the telephone, Alexander Graham Bell. Currently, the company provides 5G services in over 14,000 cities and towns across the United States.
AT&T Inc. (NYSE:T)’s Q2 2022 results reported an EPS of $0.65, compared to $0.61 estimates. The revenues were down 32.70% compared to the revenues in the same quarter a year ago. The company generated $29.64 billion, outperforming the estimates by $194.21 million. In the first half of 2022, the company generated a free cash flow of $4 billion and expects $14 billion of FCF at the end of FY2022. According to AT&T Inc. (NYSE:T), the free cash flow generation will be through wireless customer growth, price increases, and lower cash interest expenses in the second half of the year.
As of August 7, AT&T Inc. (NYSE:T) has a high dividend yield of 6.05% compared to the S&P 500’s average yield of 2%. The company paid out its previous quarterly dividend of $0.278 on August 1, 2022, to the shareholders of record on July 9. The current payout ratio of the company is 75% and the FCF required to cover the dividends is around $2 billion. Furthermore, the FWD non-GAAP P/E ratio of AT&T Inc. (NYSE:T) is 7.23, compared to the sector median of 18.05.
On July 22, Deutsche Bank analyst Bryan Kraft reiterated a Buy rating on AT&T Inc. (NYSE:T) and lowered the price target to $22 from $24. Kraft noted that the company’s Q2 results showed strong execution in wireless customers and average revenue user growth. However, the performance in Business Wireline and free cash flow lagged due to macroeconomic headwinds.
AT&T Inc. (NYSE:T) is one of the most prominent 5G stocks to buy along with Apple Inc. (NASDAQ:AAPL), Broadcom Inc. (NASDAQ:AVGO), and T-Mobile US, Inc. (NASDAQ:TMUS).
Here is what Weitz Investment Management had to say about AT&T Inc. in its Q4 2021 investor letter:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
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Disclosure: None. 11 Best 5G Stocks to Buy Now is originally published on Insider Monkey.
