We recently compiled a list of the 10 Best 5G Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where Crown Castle Inc. (NYSE:CCI) stands against the other 5G stocks.
5G, or fifth-generation wireless technology, is the latest evolution in mobile networks, which is designed to significantly improve speed, reduce latency, and enhance the capacity and connectivity of mobile devices. A Market Research Future report estimates that in 2024, the 5G market is projected to be worth $15.03 billion, and by 2032, it could reach $229.41 billion. This rapid increase represents a compound annual growth rate (CAGR) of 40.60% during the forecast period. According to some experts, 5G is one of the most important trends in technology along with artificial intelligence (AI).
5G and AI Could be Catalysts of Global Digital Transformation
In a CNBC interview at the Mobile World Congress Shanghai on June 26, director-general of the GSM Association, Mats Granryd highlighted the deep connection between 5G and AI and suggested that their mutual rise is not accidental. He said that “AI feeds off 5G and 5G feeds off AI.” This is especially evident in China, where the development of standalone 5G networks is well advanced and discussions are already shifting toward 5G Advanced (5.5G). While some countries lag, like the Philippines, Mats pointed out that this dynamic between 5G and AI is most prominent in regions with widespread 5G coverage.
When asked about the rivalry between countries like the U.S. and China in AI and 5G, Mats said that such competition is insignificant. He said that from his experience on the GSMA board, which represents the 25 largest mobile operators globally, the focus is on creating common standards and specifications rather than competing.
He talked about the difficulties of the 2G and 3G eras when different technologies created challenges for global connectivity. The shift to a unified 4G standard was a pivotal moment that laid the foundation for the digital economy.
Mats believes that 5G will follow a similar path to become a common platform worldwide, which will also extend to AI. While some regions may advance faster than others initially, he showed confidence in the fact that everyone will eventually catch up and benefit from the integration of AI with 5G.
Our Methodology
For this article, we used stock screeners and ETFs to identify companies involved in the 5G market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of an array of cell towers on a distant hilltop.
Crown Castle Inc. (NYSE:CCI)
Short Interest as % of Shares Outstanding: 1.12%
Number of Hedge Fund Holders: 38
Crown Castle Inc. (NYSE:CCI) is a real estate investment trust (REIT) and a key player in the shared communications infrastructure sector. The company has a network of more than 40,000 cell towers, over 90,000 route miles of fiber, and around 115,000 small cells on air or under contract. It ranks at 7 on our list of best 5G stocks to buy according to short sellers.
Crown Castle’s (NYSE:CCI) 5G offerings position the company as a vital player in the future of communications infrastructure. As revealed by the company’s management at its latest earnings call, the continued demand for wireless data, which is driven by the expansion of 5G networks, supports a strong growth outlook for the company, especially within its tower business.
Management mentioned that the company’s agreements with major carriers provide a reliable and steady income, which could help it achieve an expected 4.5% revenue growth in 2024. These contracts ensure that the company has a strong financial foundation, even if the overall market experiences ups and downs.
Moreover, Crown Castle’s (NYSE:CCI) strategic focus is on optimizing its fiber and small cell businesses, which is set to enhance its 5G-related growth potential. The company’s shift towards providing additional customer solutions that use its existing high-quality fiber footprint will allow it to add revenue with reduced capital expenditure, which could improve profitability.
The small cell business, which is an important component of 5G networks, is also positioned for solid growth. Despite a short-term reduction in anchor node builds (main starting points for expanding a small cell network), the company expects small cell revenues to grow by double digits over the next several years. This growth is supported by the company’s large number of planned projects and the long-term need for its customers to build denser, more powerful networks in important areas.
In Q2, 38 hedge funds held Crown Castle’s (NYSE:CCI) shares worth $1.045 billion. As of June 30, Fisher Asset Management is the company’s most prominent shareholder with 4.88 million shares, worth $477.223 million.
Overall CCI ranks 7th in our list of the best 5G stocks to buy according to short sellers. While we acknowledge the potential of CCI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
