In this article, we discuss the 5 best communication stocks to buy now. If you wish to read our detailed analysis of the communication sector, go directly to 10 Best Communication Stocks To Buy Now.
5. T-Mobile US, Inc. (NYSE:TMUS)
Number of Hedge Fund Holders: 86
T-Mobile US, Inc. (NYSE:TMUS) is one of the largest mobile communication firms in the United States, offering voice and data services to millions of consumers.
On March 11, Tigress Financial analyst Ivan Feinseth initiated coverage of T-Mobile US, Inc. (NYSE:TMUS) with a ‘Buy’ rating and $185 price target. The analyst sees the company’s growth momentum and strong execution continuing to accelerate in 2022. He also sees the firm as well-positioned to benefit from accelerating trends in cloud and edge computing, increasing consumer demand for high-speed connectivity, and ongoing integration of IoT (internet of things) and the metaverse.
In March, T-Mobile US, Inc. (NYSE:TMUS) announced a five-year innovation partnership with Disney Studios StudioLAB, for the exploration of emerging tech such as virtual presence, Mixed Reality and immersive experiences for consumers. Under the partnership, both firms will also use 5G technology to develop new and efficient ways to produce and distribute content, both from inside studios as well as remote locations.
Out of all the hedge funds tracked by Insider Monkey, 86 were long T-Mobile US, Inc. (NYSE:TMUS) in the fourth quarter of 2021, with aggregate positions worth $6.06 billion. The top shareholder in the firm over Q4 2021 was Viking Global, which held 13.14 million shares valued at $1.52 billion.
ClearBridge Investments mentioned T-Mobile US, Inc. (NYSE:TMUS) in its Q4 2021 investor letter. Here’s what the fund said:
“As mentioned, the communication services sector has come under some pressure, and irrational pricing competition has negatively impacted wireless industry growth and profitability of late, weighing on T-Mobile. Faced with these headwinds, and with pressure from other wireless carriers and cable companies that could cause the company to cede share in subscriber growth in 2022, we exited our position in the fourth quarter.”
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 111
The Walt Disney Company (NYSE:DIS) is a worldwide media and entertainment giant, operating popular streaming service Disney Plus and a range of theme parks around the globe.
Morgan Stanley analyst Benjamin Swinburne on April 7 gave The Walt Disney Company (NYSE:DIS) an ‘Overweight’ rating and $170 price target. He believes the firm may see the start of a historically strong period of growth at its Parks business, and it is also implementing operational tools and technology at its parks to drive structurally higher growth and incremental margins. He also sees the firm’s success in the streaming business “not priced in at current levels”. Analysts from research firms Goldman Sachs and Loop Capital are also bullish on The Walt Disney Company’s (NYSE:DIS) Parks segment, and have ‘Buy’ ratings on the company shares.
EPS for the fourth quarter was recorded at $1.06 for The Walt Disney Company (NYSE:DIS), beating analysts’ estimates by $0.43. Quarterly revenue stood at $21.82 billion, increasing 34.28% year-on-year and surpassing forecasts by more than $850 million.
111 hedge funds out of the 924 tracked by Insider Monkey held positions in the firm during the fourth quarter, up from 101 hedge funds a quarter ago. The Walt Disney Company’s (NYSE:DIS) leading shareholder during the fourth quarter was Coatue Management, which owned 5.79 million shares worth $897.9 million.
Here is what asset management firm ClearBridge Investments had to say about The Walt Disney Company (NYSE:DIS) in its Q4 2021 investor letter:
“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. Disney announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. Disney has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”
3. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 113
Netflix, Inc. (NASDAQ:NFLX) is a global video streaming firm which provides a range of content through a subscription-based model. Even though competition by new entrants such as Apple TV and Disney Plus have slowed subscriber growth in recent times, Netflix, Inc. (NASDAQ:NFLX) retains the majority of the global market share in streaming services.
On April 7, Stifel analyst Scott Devitt maintained a ‘Buy’ rating on Netflix, Inc. (NASDAQ:NFLX) shares, and revised the price target to $460 from $500. On March 30, JPMorgan analyst Doug Anmuth maintained an ‘Overweight’ rating and a $605 price target on Netflix, Inc. (NASDAQ:NFLX) shares. He noted that the firm has “meaningful room” for further global subscriber penetration, given it is currently 29% penetrated among the 776 million global broadband subscribers and 33% penetrated among the 675 million global pay TV subscribers.
In the fourth quarter, Netflix, Inc. (NASDAQ:NFLX) posted a revenue of $7.71 billion, which shows a jump of 16.03% year-on-year and beat estimates by $2.24 million. EPS for the quarter was recorded at $1.33, outperforming estimates by $0.51.
Hedge funds were seen snapping up the video streaming giant in the fourth quarter, where 113 hedge funds were long on the company shares. In comparison, 106 hedge funds held positions in Netflix, Inc. (NASDAQ:NFLX) in the third quarter. Fisher Asset Management, one of the largest hedge funds in the world, was the leading shareholder in Netflix, Inc. (NASDAQ:NFLX) during the fourth quarter, with a position comprising of 5.42 million shares worth $3.26 billion.
ClearBridge Investments talked about Netflix, Inc. (NASDAQ:NFLX) in its Q4 2021 investor letter. Here’s what the fund said:
“We were quite active during the quarter, leveraging volatility to add 10 new names to the portfolio while exiting seven others. Among our new purchases was Netflix in the communication services sector. Netflix is the global leader in the production and distribution of streaming entertainment, operating a high-quality subscription business with room for continued growth in a large addressable market. The stock has faced headwinds due to concerns around subscriber growth. We attribute this recent weakness to COVID-related production delays that have slowed the pace of new shows premiering on the platform and believe Netflix has a strategic advantage in scaling its business given its large content library and lead versus peers in establishing local content studios and partnerships.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 158
Alphabet Inc. (NASDAQ:GOOG) is a worldwide conglomerate which operates a number of social media platforms, its own mobile operating system, and the world’s most used search engine, all of which combine to give it unparalleled dominance in the online advertising market. As of April 7, the share price of Alphabet Inc. (NASDAQ:GOOG) has soared 20.48% in the last 12 months, and 7.22% in the last 1 month.
On March 10, Deutsche Bank analyst Ben Black initiated coverage of Alphabet Inc. (NASDAQ:GOOG) with a ‘Buy’ rating and $3,150 price target. Black sees Alphabet benefitting from the secular trend of businesses shifting from physical locations to online mediums, and the increasing prevalence of e-commerce as a channel within global retail.
Alphabet Inc. (NASDAQ:GOOG) reported an EPS of $30.69 in the fourth quarter, outperforming analysts’ forecasts by $3.41. Its revenue for Q4 2021 stood at $75.33 billion, signaling an increase of 32.39% as compared to the year-ago quarter and beating estimates by $3.50 billion.
158 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG) shares in Q4 2021, in contrast to 156 in the preceding quarter. TCI Fund Management was the largest shareholder of the tech firm over the fourth quarter, with 2.95 million shares worth $8.54 billion.
Vulcan Value Partners, an investment firm, talked about many stocks in its Q4 2021 investor letter and Alphabet Inc. (NASDAQ:GOOG) was one of them. The fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet, performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet (Google) again with a margin of safety.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 224
Meta Platforms, Inc. (NASDAQ:FB) is the parent company of Facebook, Instagram and WhatsApp. The firm generates a majority of its revenue from advertising services, which makes it one of the best communication stocks to buy. It is also one of the front-runners in the development of technology for the Metaverse, and last year interestingly rebranded itself from Facebook to Meta Platforms.
UBS analyst Lloyd Walmsley on April 5 raised the firm’s price target on Meta Platforms, Inc. (NASDAQ:FB) to $300 from $280 and maintained a ‘Buy’ rating on the company shares. The analyst noted that changes to Instagram Newsfeed, along with improvements in Reels content and algorithm can drive better engagement which he expects will monetize later this year and in 2023. The company posted a revenue of $33.67 billion in the fourth quarter, signaling an increase of 19.95% year-on-year and beating estimates by $230.60 million.
224 out of the 924 elite hedge funds tracked by Insider Monkey in the fourth quarter held stakes in Meta Platforms, Inc. (NASDAQ:FB), with a combined worth of $31.8 billion. Fisher Asset Management increased its stake in the firm by 27% in the fourth quarter to comprise of 9.58 million shares worth $3.22 billion, making it the largest shareholder of Meta Platforms, Inc. (NASDAQ:FB).
Boyar Value Group, an investment firm, talked about about Meta Platforms, Inc. (NASDAQ:FB) in its Q4 2021 investor letter. The fund said:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms Inc. (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
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