In this article we discuss the 5 best 5G stocks to buy now. If you want to read our detailed analysis of these stocks, go directly to 10 Best 5G Stocks to Buy Now.
5. Broadcom Inc. (NASDAQ: AVGO)
Number of Hedge Fund Holders: 59
Broadcom is one of the best 5G stocks to buy now. In 2019, the company said it completed its 5G switching portfolio designed to enable the end-to-end networks. Last year, the company said it would sell $15 billion worth of wireless equipment to Apple over the next 3 years. In the fourth quarter, the company posted better-than-expected revenue and strong profit. Operating profit in the quarter jumped 23% to $1.84 billion.
According to our database, the number of AVGO’s long hedge funds positions was unchanged at the end of the fourth quarter of 2020. There were still 59 hedge funds that hold a position in AVGO. The biggest stakeholder of the company is Cantillon Capital Management, with 1.2 million shares, worth $505.7 million.
4. T-Mobile US, Inc. (NASDAQ: TMUS)
Number of Hedge Fund Holders: 103
Wireless carrier T-Mobile would be one of the biggest beneficiaries of the 5G revolution. The company claims that its 5G network is 3.5 times bigger than Verizon’s and reaches over 200 million people. KeyBanc recently gave bullish comments about T-Mobile stock, along with several other telecom companies, citing the upcoming strengths in the 5G market in the U.S. The firm sees net organic growth at T-Mobile slowing slightly in 2022 before accelerating back to 5% – 6% range.
As of the end of the fourth quarter, 103 hedge funds in Insider Monkey’s database of 887 funds held stakes in TMUS, compared to 94 funds in the third quarter. Viking Global is the biggest stakeholder in the company, with 8.71 million shares, worth $1.2 billion. TMUS ranks 20th in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.
Schroder Investment Management said in their letter that they are hopeful for T-Mobile US, Inc. (NASDAQ: TMUS)’s growth. Here is what Schroder Investment Management has to say about T-Mobile US, Inc. in their investor letter:
“T-Mobile US, Inc.’s (“TMUS”) 2020 merger with Sprint Corporation (“Sprint”) was transformational. The company now controls c.45% of low/mid-band spectrum (which is crucial for 5G) but has only 29% of industry subscribers. We expect this gap to narrow over time, via market share gains, while the deal will also generate significant merger synergies; TMUS should, consequently, achieve substantial profits and free cash flow growth over the next 3-4 years.
TMUS has, hitherto, had an inferior network to its peers, and achieved its subscriber growth via very effective marketing and lower prices, encapsulated in its ‘un-carrier’ approach.
In the 5G era, however, it will have a much better network than its peers – as well as lower prices – because it has more of the critical mid-band (2.5GHz) spectrum than AT&T Inc. (“T”) and Verizon Communications Inc. (“VZ”) combined.
The value of this advantage is reflected in the very aggressive C-Band auction currently underway, in which all three companies have likely spent heavily; T and VZ to supplement their holdings of the key enabling asset for the new 5G era, and TMUS to reinforce its advantage and force its peers to leverage up, so they will be less likely to compete on price. The proceeds from this auction have already reached $81bn (and will entail further substantial spending to ready it for use).
Thus, TMUS is targeting the rollout of its 2.5GHz spectrum across 100mn and 200mn POPs by the end of 2020 and 2021 respectively; this will allow it to offer average speeds of 300Mbps (peak speeds >1Gbps) to subscribers (using only 60MHz of the total 160MHz it owns). Its coverage/offer will be far superior to the competition: T’s standard 5G speeds are 40-60Mbps (i.e. barely faster than 4G LTE); VZ’s 5G ultra-wideband network will offer faster speeds (in theory up to multi-Gbps) but currently covers only 2mn POPs, and is difficult to scale because the mmWave spectrum, on which it relies, propagates only over very short distances and is subject to interference (e.g. by foliage).
It is unlikely that the C-band auction will allow T/VZ to rectify their considerable spectrum lag relative to TMUS: 280MHz is being sold, and VZ requires c.190MHz and T c.150MHz to match TMUS. And the spectrum will take considerable time to clear and be deployed (120MHz clears in December 2021 and 160MHz in December 2023). It is also worth noting C-Band is not nearly as good as TMUS’ 2.5GHz – it has weaker propagation characteristics, thus requiring a much denser network grid which is more costly.
We forecast TMUS to grow its market share of subs by only 100bps per annum 2021-2024, i.e. in line with its prior rates, despite having a better network and cheaper pricing than T/VZ.
3. Verizon Communications Inc. (NYSE: VZ)
Number of Hedge Fund Holders: 67
Verizon ranks 3rd in the list of 10 best 5G stocks to buy now. The company was the lead bidder in a recent government auction for 5G airwaves in the U.S, with a $45 billion offer. The company is already offering 5G services in many states. Earlier this year, Verizon expanded 5G network to some parts of Sacramento, Seattle and Pensacola. The stock is up 10% over the last 12 months.
Warren Buffett’s Berkshire Hathaway currently holds 146.7 million shares of Verizon that amounts $8.62 billion. VZ occupies 3.19% of Buffett’s total portfolio.
2. QUALCOMM Incorporated (NASDAQ: QCOM)
Number of Hedge Fund Holders: 85
Qualcomm is one of the best 5G stocks to buy now. The company offers various products for the 5G infrastructure. Its Qualcomm Snapdragon 5G Mobile platforms offer modem-to-antenna system solution for 5G multimode devices. According to data by IPlytics Platform, the company is a leader in the 5G patent/patent family classifications. In March, Piper Sandler analyst Harsh Kumar upgraded QCOM stock to Overweight from Neutral, citing attractive valuation, the company’s dominance in the IoT and RF markets. The analyst set a price target of $160 for the stock.
Matrix Capital Management currently owns 4 million shares of QCOM, worth $609.97 million. QCOM occupies 0.16% of Matrix Capital’s overall equity.
Alger Spectra Fund, in their Q4 2020 investor letter, mentioned QUALCOMM Incorporated (NASDAQ: QCOM). Here is what Alger Spectra Fund has to say about QUALCOMM Incorporated in their Q4 2020 investor letter:
“Qualcomm is a leading semiconductor company with strong positions in telecommunications end markets that position the company as a primary beneficiary of the innovative 5G network standard rollout. Qualcomm is commonly acknowledged as having the best technology specs for 5Gchipsets as evidenced by signing up all 75 major original equipment manufacturers of telephone handsets including Apple. Additionally, beyond handsets, Qualcomm is positioned to generate growth from automobile manufacturers, the Internet of Things, gaming and other markets.
The shares contributed to performance because Qualcomm’s earnings beat expectations in the face of coronavirus driven declines in the broad handset market. Importantly, the market is improving as the magnitude of handset declines is diminishing sequentially. Qualcomm’s fundamentals are benefitting from a faster-than-expected shift to the 5G standard. As such, the company’s 5G guidance exceeded expectations.”
1. NVIDIA Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 88
Nvidia tops the list of 10 best 5G stocks to buy now. The company is working on hardware and software fit for the futuristic 5G networks and higher speeds. It also offers “Nvidia Aerial,” a software development platform designed for wireless companies for 5G wireless Radio Access Networks (RANs). The company’s computing architecture CloudXR is also designed for 5G to render high-quality AR/VR content at the edge and stream it over the 5G networks.
With a $1.9 billion stake in NVDA, GQG Partners owns 3.7 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 88 hedge funds held stakes in NVIDIA as of the end of the fourth quarter, versus 82 funds in the third quarter.
Mairs & Power, in their Q4 2020 investor letter, mentioned NVIDIA Corporation (NASDAQ: NVDA). Here is what Mairs & Power has to say about NVIDIA Corporation in their Q4 2020 investor letter:
“The Fund’s biggest relative contributor in 2020 was Nvidia (NVDA). Nvidia specializes in graphics cards for computers, and it has benefited from updated chipsas well as strong market positions in applications and machine learning.”
You can also take a peek at Billionaire Jim Simons’ Top 10 Stock Picks and Billionaire Steve Cohen’s Top 10 Stock Picks.
