3 Stocks That Are Winning the Early Lead in 5G Pacing the Next Tidal Wave of Connectivity
As technology advanced globally, all there was on the horizon was one big launch: 5G wireless internet technology that is brininging a tidal wave of innovation into virtually every sort of sector.
It’s changing IoT, smart cities, and self-driving cars. With faster speed in data transmission and real-time communication, it’s opening new business models-and thus efficiency.
Against this background, it could be wise to bet on companies that are quickly capitalizing on 5G building and development opportunities in mobile networks. Some of the companies such include T-Mobile US, Inc. TMUS, Verizon Communications Inc. VZ, and QUALCOMM Incorporated QCOM.
Investment in the expansion of both 5G-enabled networks and related technologies is growing rapidly to meet customer demand for devices and services. The Federal Communication Commission announced that up to $9 billion in Universal Service Fund support will be made available to carriers to deploy advanced 5G mobile wireless services in Rural America.
Not to mention that U.S. National Science Foundation Directorate for Technology, Innovation and Partnerships has also invested $25 million into 5G communication infrastructure.
According to BCG’s research stream, it is forecasted that, by 2030, 5G will be able to add another $1.7 trillion to US economic growth. As such, this revolution presents one with an investment opportunity that one cannot miss. The global market size of 5G services is expected to grow at a CAGR of 59.4% by 2030.
Using all of the above information, let us now analyze the basics of the stocks highlighted below:
T-Mobile US, Inc. (TMUS)
2024 STOCK MARKET OUTLOOK
TMUS offers mobile communications services, including voice, messaging, and data through its flagship brand, T-Mobile and Metro by T-Mobile. Its mobile communications services are primarily offered using its 4G Long Term Evolution (LTE) network and its 5G technology network.
On 6 August, TMUS announced a new channel subsidy program for 5G laptops and 5G business internet called Partner Plus, making it cheaper and easier to allow businesses to leverage the power of 5G. Its higher-cost hardware prevents many firms from taking advantage of 5G, and so by bringing down such costs, TMUS can bring 5G within reach of all organizations.
On June 30, the end of the second quarter of 2024, TMUS revenues had reached $19.77 billion and year-over-year increased by 3%, while the company’s postpaid service revenue increased 6.9% during the period.
Quarter Report Adjusted EBITDA of $8.05 billion reported by the company was an 8.8% increase from a year ago. Net income per share rose 33.9% from the same period last year, to $2.49. TMUS adjusted free cash flow increased by 54.3% year on year to $4.44 billion.
On the back of this quarter’s momentum and successful acquisition, the company updated 2024’s guidance. TMUS now expects full-year core adjusted EBITDA to be in the range of $31.50 billion to $31.80 billion. It also expects adjusted free cash flow to be in the range of $16.60 billion to $17 billion and postpaid net customer additions to be in between 5.4 million and 5.7 million.
The revenue estimate is expected at $20.08 billion for the fiscal third quarter ended September 2024; thus, it shows an increase of 4.3% from last year. The estimate for Earnings Per Share (EPS) for this period came to be $2.47, which is an improvement of 23.6% year over year. Company history of earnings surprises is magnificent; it has out-beaten the consensus estimates for EPS in three out of the last four quarters.
TMUS is trading 44.5% above the same time last year, close to $202.41 in last session.
TMUS’ POWR Ratings point to an excellent outlook for the stock. The overall rating is B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated using a total of 118 different factors, and this factors are weighted to an optimal degree.
TMUS has a B grade for Growth, Stability, Sentiment, and Quality. It’s ranked #3 out of 18 stocks in the Telecom – Domestic industry. Click here to see the additional ratings for TMUS (Value and Momentum).
Verizon Communications Inc. (VZ)
VZ is a holding company, providing communications, information, and entertainment products and services through its subsidiaries to consumers, businesses, and governmental agencies. Two groups run the business: Verizon Consumer Group and Verizon Business Group.
On September 9, VZ announced that it would buy Frontier Communications Parent, Inc. (FYBR) in a cash deal worth approximately $20 billion. This acquisition is expected to considerably expand VZ’s fiber footprint and intelligent edge network for digital innovations such as AI and IoT across the country to both existing and new customers. FYBR’s 2.2 million fiber subscribers will now form part of VZ’s connections.
On September 4, buoyed by strong financial performance the company increased its quarterly dividend by $0.0125 to $0.6775 per share, payable on November 1, 2024.
VZ has been continuously raising its annual dividend for 18 years now. The current yearly dividend is at $2.71, corresponding to a yield of 6.19% at the current price per share. It averages its dividend yield at 5.81% over the last four years. One more significant characteristic of the company is that it has grown its payout stream at an admirable five-year compounded annual growth rate of 2%.
VZ total operating revenues rose modestly from last year to $32.80 billion in the fiscal second quarter that ended June 30, 2024. Its operating income rose by 8.3% from the same value last year to $7.82 billion. The company’s consolidated adjusted EBITDA came in at $12.30 billion, rising 2.8% from last year, and EPS came in at $1.09.
Retail postpaid phone net additions are 148,000, and retail postpaid net additions are 340,000.
VZ updated guidance and expectations on its fiscal year 2024, which features a projected increase in its adjusted EBITDA of 1% to 3%. The company’s adjusted EPS is expected to fall in the range of $4.50 and $4.70. The company also expects total wireless services revenue growth in the range of 2% to 3.5%.
Street expects VZ’s revenues for fiscal Q4 (ended 31-Dec-24) to rise 0.9% Y/Y at $35.54 billion. For Q4, its EPS is expected to grow by 2.1% from last year’s to $1.10. Furthermore, the company has managed to beat the consensus estimates for EPS three quarters running from the last four.
Shares of this stock are up 28.9% over the past year and 17.6% over the past nine months, at close of last trading session at $43.86.
No wonder VZ carries a B grade for the overall score, a Buy equivalent in our POWR Ratings system. It has a B grade for Stability. Among the Telecom – Domestic stocks, VZ ranks #5 out of 18.
Also, we have rated QCOM for Growth, Value, Momentum, Sentiment, and Quality. See all QCOM ratings here.
QUALCOMM Incorporated (QCOM)
QCOM designs and markets fundamental wireless and mobile platforms. QCOM operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).
On July 17, the QCOM board of directors announced a quarterly dividend of $0.85 a share. This payout is going to come on September 26, 2024, to its shareholders.
QCOM has been in a streak of increased dividend payouts for 20 consecutive years. For one, this annual dividend payout comes in at $3.40 a share. That equates to a yield of 2.04% using the current share price. And over four years, this average dividend yield sits at 2.10%.
QCOM declares its revenues for the third quarter, which had ended on June 23, 2024, had grown by 11.1% year-over-year to $9.39 billion. The company’s GAAP operating income attracted $3.02 billion. Through its non-GAAP, this earnings figure grew 19.7% from the year-earlier quarter. On its non-GAAP basis, QCOM reported $2.65 billion, as its year-over-year increase stood at 25.8%. Its net income per share stood at $2.33. That reflected a 24.6% improvement from the comparable quarter a year earlier.
Looking ahead, the company estimates service revenue for fiscal 2024 to be $9.50 billion – $10.30 billion, revenues from QCT segment and QLT segment to be in the range of $8.10 billion-$8.70 billion and $1.35 billion-$1.55 billion respectively. The company further estimates its non-GAAP EPS to be within the range of $2.45 to $2.65.
Analysts expect QCOM to increase its revenue for the second quarter that would end on September 2024, by 13.8 percent year-over-year. They also predict an EPS for the same period, up by 26.1 percent from the quarter last year, to $2.55. The good news is that the stock has topped both the estimates for EPS and revenue in all four trailing quarters.
Shares of QCOM rose 48.3% during the last year, to end the last trading session at $164.98.
QCOM holds a positive rating with Powar Ratings. It has an overall B grade that could be translated into a Buy in our rating system.
It’s also graded A for Quality. It is #2 in the same Semiconductor & Wireless Chip industry. Click here to see QCOM’s Growth, Value, Momentum, Stability, and Sentiment ratings.
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TMUS shares traded at $202.80 on Friday afternoon, +$0.39 (+0.19%). YTD, TMUS is 27.89% higher compared with the 18.84% gain in the S&P 500 index year-over-year through that same date.