5 Best Communication Stocks To Buy According To Hedge Funds

In this article, we discuss 5 best communication stocks to buy according to hedge funds. If you want to read our detailed discussion on the communication industry, head directly to 12 Best Communication Stocks To Buy According To Hedge Funds. 

5. Cisco Systems, Inc. (NASDAQ:CSCO)

Number of Hedge Fund Holders: 64

Cisco Systems, Inc. (NASDAQ:CSCO) is a global company that designs, manufactures, and sells networking and communication products worldwide. The company’s offerings include switches, routers, wireless products, and computing solutions. Cisco Systems, Inc. (NASDAQ:CSCO) is one of the top communication stocks to watch. On November 15, Cisco Systems, Inc. (NASDAQ:CSCO) reported financial results for the first fiscal quarter of 2024. The company announced a non-GAAP EPS of $1.11 and a revenue of $14.67 billion, topping Wall Street estimates by $0.08 and $40 million, respectively. 

According to Insider Monkey’s third quarter database, 64 hedge funds were bullish on Cisco Systems, Inc. (NASDAQ:CSCO), compared to 55 funds in the earlier quarter. Cliff Asness’ AQR Capital Management is the largest stakeholder of the company, with a position worth $611.6 million. 

Oakmark Fund made the following comment about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2023 investor letter:

“Cisco Systems, Inc. (NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”

4. Comcast Corporation (NASDAQ:CMCSA)

Number of Hedge Fund Holders: 68

Comcast Corporation (NASDAQ:CMCSA) is a global media and technology company operating in various segments, including Residential Connectivity & Platforms, Business Services Connectivity, Media, Studios, and Theme Parks. The company provides residential broadband and wireless services, video services, and advertising. It is one of the top communication stocks to buy. 

On January 25, Comcast Corporation (NASDAQ:CMCSA) reported a Q4 Non-GAAP EPS of $0.84 and a revenue of $31.25 billion, outperforming Wall Street estimates by $0.05 and $800 million, respectively. Despite ongoing declines in broadband subscribers, the company exceeded expectations in its fourth-quarter results and announced an increased buyback program of $15 billion.

According to Insider Monkey’s third quarter database, 68 hedge funds were bullish on Comcast Corporation (NASDAQ:CMCSA), compared to 66 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the leading stakeholder of the company, with approximately 32 million shares valued at $1.4 billion. 

ClearBridge Large Cap Value Strategy made the following comment about Comcast Corporation (NASDAQ:CMCSA) in its Q3 2023 investor letter:

“Long-term holdings Charter and Comcast Corporation (NASDAQ:CMCSA) delivered strong second-quarter results relative to expectations; their stable recurring revenue streams and undemanding valuations were rewarded in the current environment. Cable multiples compressed over the past 24 months on fears of heightened competition in their core broadband business from fixed wireless and fiber providers. While fiber remains a competitive alternative to cable broadband over the long term, high upfront investments and a materially higher cost of capital are resulting in slower buildouts than previously expected. Fixed wireless also continues to gain traction, particularly in rural markets, but share gains also appear to be moderating. At the same time, both Comcast and Charter are expanding their footprints into rural and adjacent markets while gaining wireless market share, leveraging their mobile virtual network operator agreements with Verizon. We think both cable companies are well-positioned to continue to grow while generating substantial free cash flows. We added to Comcast during the quarter.”

3. Charter Communications, Inc. (NASDAQ:CHTR)

Number of Hedge Fund Holders: 73

Charter Communications, Inc. (NASDAQ:CHTR) is a broadband connectivity and cable operator in the United States, serving both residential and commercial customers. The company provides internet, video, mobile, and voice services, along with a range of broadband connectivity solutions, including fixed internet, WiFi, and mobile services. It is one of the best communication stocks to invest in. 

On February 5, J.P. Morgan downgraded Charter Communications, Inc. (NASDAQ:CHTR) stock from Overweight to Neutral and reduced the price target to $370 from $445. The downgrade is attributed to weaker broadband trends and a slowdown in EBITDA growth. Analysts anticipate persistent broadband weakness until 2025, resulting in losses. 

According to Insider Monkey’s third quarter database, 73 hedge funds were long Charter Communications, Inc. (NASDAQ:CHTR), compared to 67 funds in the prior quarter. Harris Associates is the largest stakeholder of the company, with 5.2 million shares worth $2.3 billion. 

Here is what Weitz Conservative Allocation Fund has to say about Charter Communications, Inc. (NASDAQ:CHTR) in its Q3 2023 investor letter:

“We swapped the Fund’s Liberty Broadband Corporation (NASDAQ:LBRDK) shares back to Charter Communications, Inc. (NASDAQ:CHTR) (Charter is by far Liberty Broadband’s largest asset), and the combined position was the most notable quarterly contributor. Investor sentiment around broadband’s competitive position became less negative, and the stocks rebounded nicely from what we considered oversold levels.”

2. T-Mobile US, Inc. (NASDAQ:TMUS)

Number of Hedge Fund Holders: 79

T-Mobile US, Inc. (NASDAQ:TMUS) delivers mobile communication services across the United States, Puerto Rico, and the United States Virgin Islands. The company provides voice, messaging, and data services to customers in different plans, including postpaid, prepaid, and wholesale. T-Mobile US, Inc. (NASDAQ:TMUS) is one of the best communication stocks to buy. 

On January 25, T-Mobile US, Inc. (NASDAQ:TMUS) reported a Q4 GAAP EPS of $1.67, falling short of Wall Street estimates by $0.23. The revenue came in at $20.48 billion, outperforming market consensus by $810 million. 

According to Insider Monkey’s third quarter database, T-Mobile US, Inc. (NASDAQ:TMUS) was part of 79 hedge fund portfolios, compared to 86 in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 5.2 million shares worth over $734 million. 

ClearBridge Dividend Strategy made the following comment about T-Mobile US, Inc. (NASDAQ:TMUS) in its Q3 2023 investor letter:

“During the quarter we initiated positions in two new names: T-Mobile US, Inc. (NASDAQ:TMUS) and Gilead Sciences. T-Mobile is the best-in-class player in the wireless space, delivering the strongest growth with the lowest cost structure and the best consumer proposition. T-Mobile’s strength is rooted in its advantaged competitive position. Its superior spectrum holdings enable it to provide better wireless service at meaningfully lower cost. T-Mobile’s annual capital expenditures run about $10 billion, on the order of half the amount its peers must spend. Due to its lower cost structure, T-Mobile can undercut its competitors on price while still generating compelling profitability and returns.

This combination — superior service at lower prices — has enabled T-Mobile to outgrow its competition. In the three years since completing its merger with Sprint, T-Mobile has grown its postpaid subscriber base by about 22%. Over the same period, AT&T’s has grown by about 14%, while Verizon’s by less than 5%.

Given the high fixed-cost nature of the wireless business, these steady increases in revenue growth have led to outsize increases in profits and free cash flow. Free cash flow in 2023 is expected to come in around $13.5 billion, up from less than $8 billion last year. In 2024 free cash flow is expected to grow by over 20% to approximately $17 billion — providing a 10% yield based on today’s stock price.

We have long admired T-Mobile, but until recently the stock did not pay a dividend. The company announced its inaugural dividend in September, and we bought the stock shortly thereafter. The initial yield is about 2% and it is expected to grow about 10% per year.”

1. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 234

Meta Platforms, Inc. (NASDAQ:META) is one of the top communication stocks to invest in according to hedge funds. On February 1, Meta Platforms, Inc. (NASDAQ:META) reported a Q4 GAAP EPS of $5.33 and a revenue of $40.11 billion, outperforming Wall Street expectations by $0.39 and $940 million, respectively. Meta’s board of directors also approved a cash dividend of $0.50 per share for its outstanding common stock. The dividend is scheduled to be paid on March 26, 2024, to shareholders of record as of February 22.

According to Insider Monkey’s third quarter database, 234 hedge funds were bullish on Meta Platforms, Inc. (NASDAQ:META), compared to 225 funds in the preceding quarter. Rajiv Jain’s GQG Partners is a prominent stakeholder of the company, with more than 11 million shares worth $3.3 billion.

The FPA Crescent Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2023 investor letter:

“Meta Platforms, Inc. (NASDAQ:META) saw a welcome recovery in engagement and revenue year-to-date following a tough 2022. The company has continued to offer new solutions that allow advertisers to target customers effectively and efficiently via one of the world’s leading digital platforms. Moreover, operating profits are rising due to an organization-wide focus on improving productivity and accelerating the time to market for new products. However, overall profitability continues to be weighed down by losses in the Reality Labs segment. But, there is positive optionality that Meta will emerge from the AI arms race as one of the leading players in the industry.”

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