Are These Top 5G Stocks On Your November 2020 Watchlist?
Earlier this month, Apple (AAPL Stock Report) released its first 5G iPhone. Since then, the interest in 5G stocks has been on the rise. The beneficiaries of the 5G revolution come from multiple sectors. They include phone manufacturers, mobile carriers, and possibly video streaming players which rely on a high-speed internet connection to provide high-fidelity content. Besides, you can expect semiconductor stocks and gaming stocks to benefit immensely from the deployment of 5G technology. The tailwinds generated are expected to benefit productivity and transform our experiences with the way we interact with technology. This could be excellent news for investors looking for top 5G stocks to buy that have seen growth in the last few months.
T-Mobile (TMUS Stock Report) saw a 43% surge in its stock price year-to-date. This could simply be due to the fact that it was the first to introduce 5G to the U.S. AT&T (T Stock Report) and Verizon (VZ Stock Report) were quick to follow suit. These telecommunication giants undoubtedly aim to take advantage of the wave of 5G phones that are coming to the market this year. With the general public spending less time and money outside, the smartphone market is prime real estate for these companies to grow. With all that being said, would this list of 5G stocks be interesting enough for you to include in your portfolio?
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Top 5G Stocks To Watch In November: Telefonaktiebolaget LM Ericsson
First, upon the list, we have Ericsson (ERIC Stock Report). This Swedish multinational networking and telecommunication company offers information and communications tech-based services, software, and infrastructure. Ericsson is no newcomer to the business of mobile network infrastructure. They had a 27% market share in the 2G/3G/4G market in 2018. That makes them the largest non-Chinese company. The company has been around since 1876 and has an estimated 50,000 patents under their belt.
For their second-quarter results, the company reported a net income increase of 40% year-over-year. CEO Börje Ekholm said that “Q2 organic sales were flat and gross margin improved to 38.2%, including negative effects from strategic contracts. Free cash flow before M&A improved to SEK 3.2 billion. While the effects of COVID-19 create uncertainties, with current visibility we maintain the full-year targets for the group.” The company appears to be confident in its upcoming 5G upgrade cycle which some suspect will accelerate the growth in its stock price for Q4 2020.
Ericsson has recently reinforced their long partnership with Airtel, India’s largest communications service provider. This includes a renewed multi-year contract to supply and deploy 5G-ready radios from Ericsson. The news might have generated some renewed interest in the stock. Investors likely perceive that Ericsson will be taking the monopoly in the Indian 5G market. Undeniably, this agreement helps to expand its consumer outreach which could benefit the company in the long run.
Top 5G Stocks To Watch In November: Xilinx
Next on this list would be Xilinx Inc. (XLNX Stock Report). The American tech company is a pioneer in field-programmable gate array (FGPA) chip production. The company was founded in 1984 and is the inventor of FGPA. This is crucial to note because FPGAs can be programmed to fulfill a wide variety of tasks. The latest versions are capable of cloud computing, AI, and most importantly 5G and network infrastructure. Despite the rough start to 2020, the recent wave of 5G capable phones may just be what the company needs. CEO Victor Peng mentioned that network providers are still working with first-gen 5G hardware. He went on to explain that second-gen and third-gen equipment will follow suit once this initial inventory is used in the field. This indicates that the roadmap ahead for 5G is still vast and developing.
XLNX stock has risen over 20% this year, which is rather impressive. This is after we consider that they lost their top client Huawei last year. In relation to this, their outlook for third-quarter fiscal 2021 is calling for a 4% to 11% increase from a year ago, to $750 million to $800 million in revenue. It appears that Xilinx feels confident about their future. This paired with the recent news of AMD acquiring Xilinx likely caught the attention of investors. In theory, the two companies will synergize well with each other. This is because the FPGAs made by Xilinx would act as accelerators that significantly boost the efficiency of AMD’s hardware.
Xilinx may have gotten off to a bad start to the year, however, it does not seem like they are giving up. With the promising future generations of 5G technology and pairing with AMD; Xilinx could be a top 5G stock to watch.
Top 5G Stocks To Watch In November: QUALCOMM Inc.
The final spot on this list goes to QUALCOMM Inc. (QCOM Stock Report). The company creates intellectual property, semiconductors, software, and provides services related to wireless technology. They are most well known for their smartphone chipsets. In the time of 5G, most consumers will likely look towards Qualcomm for their 5G chipsets. It is worth noting that about three-quarters of their total revenue comes from the sales of said chipsets. Another key source of income would be their mobile-phone royalties and licensing.
The company holds royalties from 3G and 4G technologies which they originally invented. These royalties have helped Qualcomm keep up with the competition in recent years. This is because other chip manufacturers and users have to obtain a license from the company. QCOM saw an EPS of $0.80 which beat the Q3 expectations. CEO Steve Mollenkopf stated that the company’s investment in their royalties would reap benefits as 5G is starting to become available to the public. The company has indeed built the “most extensive licensing program in mobile” and plans to fully take advantage of the 5G wave.
In recent news, India’s Jio Platforms announced the development and successful testing of a fifth-gen radio access network (RAN). The device is capable of transferring data at more than a gigabit per second. Company president Mathew Oommen gave credit to Qualcomm for the feat during a virtual US event. He also claims that the product has already been tested and validated by a top carrier in the US. Similarly to Ericsson, QCOM is likely eyeing the Indian 5G market. With expansions and a strong foundation in licensing programs, QCOM stock could be worth watching in the long haul.