In this article we talk about 5 best communication equipment stocks to buy now. For our detailed discussion and investment thesis for investing in the communications equipment industry, click to read 10 Best Communication / 5G Stocks to Buy Now.
Motorola Solutions is a communications equipment company that was formed after the spinoff of the mobile phone division into Motorola Mobility in 2011. The company makes two-way radios and public radio systems for first-responders and law enforcement, body cameras and some software applications. In November, Motorola increased its quarterly dividend by 10.9%. In the third quarter, the company posted a non-GAAP EPS of $1.95, beating the analysts’ forecasts by $0.17. Revenue in the quarter totaled $1.87 billion, beating the consensus by $40 million.
Brandon Haley’s Holocene Advisors is one of the leading hedge funds having stakes in Motorola Solutions as of the end of the third quarter. Overall, 29 hedge funds held positions in the company entering the fourth quarter. Here is what Wedgewood Partners said about MSI in its 2020 Q2 investor letter:
“Motorola Solutions guided to a surprising -15% drop in revenue for the June quarter, as local and state government shutdowns hampered the approval and installation of new software and equipment projects. In spite of this short-term disruption to revenues, the Company grew its high margin software and services bookings +9% and guided to expanding operating margins for the year. We added to our position in Motorola Solutions as the stock traded well off its highs. The Company continues to dominate the markets for missioncritical land-mobile-radio (LMR) installations and associated command center software and services for emergency responders.”
California-based Juniper Networks makes networking equipment and connectivity software. The company started to shift towards software-defined networking technology a few years back. Over the last 6 months, Juniper stock has gained over 7%. The company recently announced it will acquire internet-based networking and automated closed loop assurance company Apstra, without disclosing the details of the financial terms. In the third quarter, Juniper revenue totaled $1.13 billion, a 5% growth over the previous quarter. Net income, however, fell 13% on a year-over-year basis to reach $144.4 million.
A total of 30 hedge funds held stakes in Juniper entering the fourth quarter. The total value of these investments is $454.74 million.
Lumentum is a California-based communications equipment company. In the first fiscal quarter, the company’s revenue jumped 1% on a year-over-year basis to reach $452.4 million, beating the Wall Street estimates by $11.1 million. Optical communications revenue increased by 3% and totaled $428.5 million. Gross margins in the quarter came in at 52%, versus the consensus estimate of 47.9%.
Jim Simon’s Renaissance Technologies is one of the biggest hedge funds having stakes in Lumentum as of the end of the third quarter, with 813,604 shares of the company, worth $61.13 million. The net worth of these shares is $61.13 million.
Cisco has become a household name globally due to its routers, switches and networking equipment. The company is rapidly diversifying its business by moving into workplace software, such as video chat and VPNs. The stock rallied in November after the company posted softer-than-expected declines. Cisco’s CFO Kelly Kramer said that the company continued to increase its focus on software services and saw a 10% year-over-year growth in subscription revenue. Services revenue jumped 1.9% in the period to reach $3.34 billion, while Security segment was up 6%.
A total of 59 hedge funds in our database reported owning Cisco shares as of the end of the third quarter. Ken Fisher’s Fisher Asset Management leads these funds with 20,969,760 shares, worth $825.99 million. Here is what Heartland Advisors said about CSCO in its 2020 Q3 investor letter:
Cisco, the world’s leading computer networking provider, was down for the period after revenues from its Products and Applications business lines weakened as IT departments postponed network spending in response to COVID-19. Sales from its security line were up roughly 14% but strength in the segment wasn’t large enough to offset weakness elsewhere. Impressively, they held operating margin on a 9% revenue decline.
Wall Street’s reaction to the weak results were mixed. Some credited the company for executing well in the face of an unprecedented macro pressure on its clients, while others cited results as an indicator that Cisco is struggling in its transformation from a predominantly hardware-oriented business to one that generates recurring-revenue through software and services.
The challenges faced by Cisco strike us as a temporary setback to what has been ongoing progress in its transition to a model that generates recurring revenue and is less tied to the IT spending cycle.
We believe the positive strides made in previous quarters will resume. With the recent setback, shares are trading at an attractive 12x earnings, while generating a nearly 4% dividend yield and a free cash flow/enterprise yield of nearly 10%.”
With a market cap of $175 billion, Qualcomm tops the list of 10 best communication equipment stocks to buy now. Qualcomm is on the frontlines of the 5G revolution in the U.S. The company is reportedly making 5G equipment in various segments, including radio communications technology for IoT devices, 5G modem chips and 5G antennas. The company has also struck 5G equipment partnerships with 19 major mobile device manufactures and 18 carriers.
As of the end of the third quarter, 87 hedge funds out of the 816 funds tracked by Insider Monkey held stakes in Qualcomm. The total value of these stakes is $258.13 million.
Please also see 10 Best Lithium and Battery Stocks To Buy Now and 10 Best Stocks To Buy For 2021 According To Stan Druckenmiller
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