In this article we will take a look at the 10 best communication stocks to buy now.
The global communications sector initially consisted of just a few major players. It has now become a much more decentralized market as new opportunities emerged within the telecom industry. The industry has many functions involved including IT, construction, and AI which has opened up many business opportunities for communication companies to take advantage of. According to the Business Research Company, the telecom market size is expected to reach $3450 billion by 2022, growing at a CAGR of around 6%. This growth can be attributed to increasing development of smart cities and emerging market growth across the world.
Growth Catalyst for Communication Stocks: 5G
Perhaps the most important trend in the communications sector is the evolution of the next generation superfast 5G network technology which is already commercially available across 24 countries in the world through 40 mobile operators. Pioneering countries included South Korea, United States, Switzerland, China, and Kuwait. The major communication companies in the world such as Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), and Vodafone Group Plc (NASDAQ: VOD) are aiming to be on the forefront of the 5G revolution, capitalizing from the widespread adoption of the latest wireless technology. Verizon Communications Inc. (NYSE: VZ) has partnered with Ericsson L M Telephone Co (NASDAQ: ERIC) to help upgrade their core network and make it capable of managing 5G speed and communication upgrades. Other network providers such as T-Mobile US, Inc. (NASDAQ: TMUS) and AT&T Inc. (NYSE: T) are also leading the way in the 5G movement.
According to GSMA Intelligence, 150 million 5G network connections were established by the end of 2020. Billions of people around the world were confined to their homes after the pandemic and became reliant on wireless and broadband access. Digital transformation was recognized as the only way forward to alleviate the economic pressures of the COVID-19 pandemic.
5G has the potential to reshape the communications industry with significantly higher speeds and capacity which can allow huge amounts of data to be downloaded in a matter of seconds. Moreover, it will also play an important role by powering other technologies that will revolutionize travel, learning and innovation across the world. From the internet of things to smart homes, self-driving cars, telemedicine, virtual and augmented reality and everything in between, the wide-scale deployment of the 5G network will drive the reinvention of several businesses and consumer applications. An IHS Markit Ltd. (NYSE: INFO) report estimates that 5G will boost the global economic output by $12.3 trillion by 2035.
According to the Business Research Company, the adoption of advanced technologies and growing government initiatives during the pandemic have increased the scope and potential of the global telecom market. It is forecasted that the telecommunications market size will gain the most in China at $230.5 billion by 2022. Moreover, the top opportunities will arise in the wired telecommunications carriers’ segment which will gain $338.8 billion of global annual sales by 2022.
As digitalization is occurring across industries, there is a growing demand for connected devices, increased processing power, and wider network coverages which is driving the growth of the communications sector. Enterprises are deploying IoT to achieve cost savings and generate new revenue. Verizon Communications Inc. (NYSE: VZ) is providing businesses with Internet of Things connectivity in 170 countries worldwide. In 2020, 7.9 billion mobile connections are forecasted to increase to 8.6 billion by 2025. There will be 600 million new added connections in which two-thirds of it are coming from Asia Pacific and Sub-Saharan Africa.
The market size of the wireless communications carriers’ industry is estimated to be approximately $278.8 billion in 2021. In a world where connectivity has become an essential part of life, many communication companies in the US are taking this opportunity to innovate and introduce new services to the communications market. These communication companies have also benefited from the COVID-19 pandemic as more people made the shift to digitization and wireless communication services. With double-digit growth in revenues, it is an exciting time for the communications sector, especially for investors.
Just like the communications industry, the hedge fund industry is also seeing winds of change. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Let’s now take a look at the 10 best communication stocks to buy now.
Best Communication Stocks to Buy Now
10. Altice USA, Inc. (NYSE: ATUS)
Number of Hedge Fund Holders: 56
Market Cap: $17.289 billion
Altice USA, Inc. (NYSE: ATUS) provides broadband communications and video services in the United States, Canada, Puerto Rico, and the Virgin Islands. It offers broadband, video, telephony, and mobile services to approximately 5 million residential and business customers. The company was incorporated in 2015 and is headquartered in Long Island City, New York. Altice recently announced the launch of its Smart WiFi 6 which is optimized for Optimum and Suddenlink’s fiber-rich network. The Smart WiFi 6 has faster speeds and greater coverage. Altice USA, Inc. (NYSE: ATUS) has reported a revenue growth of 1.2% year-over-year in the first quarter of 2021 which totals $2.48 billion. Net income attributable to stockholders was $274.1 million in Q1 2021, or $0.58 per share on a diluted basis, compared to a net loss of ($0.9) million in Q1 2020, or $0.00 per share on a diluted basis. The company also completed its acquisition of Morris Broadband which will expand Altice’s USA footprint in North Carolina. The current consensus among 25 polled investment analysts is to Buy Altice USA, Inc. (NYSE: ATUS) according to CNN Business making it one of the best communication stocks to buy now.
In one of its investor letters, Greenlight Capital highlighted a few stocks and Altice Usa Inc. (NYSE:ATUS) is one of them. Here is what Greenlight Capital said:
“We also exited Altice USA with a 36% gain over two years. The company executed on cost-cutting and growth strategies and repurchased a significant amount of shares at attractive prices. We sold over concern about the 2020 advertising environment and potential broadband regulations.”
9. Rogers Communications Inc. (NYSE: RCI)
Number of Hedge Fund Holders: 15
Market Cap: $25.94 billion
Rogers Communications Inc. (NYSE: RCI) is a communications and media company that is based in Canada. It is headquartered in Toronto and operates through three segments: Wireless, Media, and Cable. The company has made our list of the best communication stocks to buy now due to its solid performance despite the continued pandemic lockdown environment. Rogers delivered strong execution and operational improvements in all its three segments in 2020. There was an addition of 44,000 wireless postpaid net subscribers and the expanded wireless adjusted EBITDA service grew by 310 basis points. Moreover, the Cable service segment experienced a revenue growth of 5% during the previous year. The total revenue for the company was $13.9 billion at the end of 2020. Rogers Communications Inc. (NYSE: RCI) has continued its efforts to expand its wireless service to more rural areas across Canada, providing 5G services to over 173 communities. It was ranked as the most reliable 5G network in Canada. Rogers Communications Inc. (NYSE: RCI) paid $252 million in dividends to their shareholders and declared a quarterly dividend of $0.50 per share on April 20, 2021. Its shares have added about 5.6% of value since the beginning of 2021 which makes it one of the best communication stocks to buy now.
At the end of the fourth quarter of 2020, 15 hedge funds in the database of Insider Monkey held stakes worth $279 million in RCI.
8. TELUS Corporation (NYSE: TU)
Number of Hedge Fund Holders: 14
Market Cap: $29.323 billion
TELUS Corporation (NYSE: TU) provides telecom and IT products and services in Canada. The company was founded in 1993 and is headquartered in Vancouver. It operates through two segments: Wireless and Wireline. Recently, TELUS Corporation (NYSE: TU) announced that it is planning to accelerate the deployment of PureFibre infrastructure and fast track the process of national 5G network rollout. TELUS Corporation (NYSE: TU) is poised to benefit from the increasing penetration of smart devices in the country. TELUS’s superior network speed, strength, and reliability has been recognized by industry-leading experts and was even included in the Q1 2021 Speedtest Intelligence report by Seattle-based Ookla. TELUS Corporation (NYSE: TU) is investing $54 billion in infrastructure and operations till 2024 to create a wider network access throughout the country. By the end of 2021, 529 new Canadian communities will have access to TELUS’ blazing fast 5G network. The company reported a strong first quarter in 2021 with a revenue of $505 million, up 57% year-over-year. Adjusted EBITDA was $129 million, up 90% year-over-year while the diluted EPS was $0.23.
Like T-Mobile US, Inc. (NASDAQ: TMUS) and AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), TU is one of the best communication stocks to buy now.
TELUS has a positive outlook for double-digit revenue growth in 2021 due to its strong operating momentum. Hence, it has secured the number 8 spot in our 10 best communication stocks to buy now list.
7. BCE Inc. (NYSE: BCE)
Number of Hedge Fund Holders: 13
Market Cap: $44.435 billion
BCE Inc. (NYSE: BCE) is a Canadian telecommunications and media company that provides internet, wireless, wireline, and television services across Canada. It owns approximately 35 TV stations, 3 streaming services, and 109 licensed radio stations. Formally known as Bell Enterprises, the company recently announced the acquisition of Montreal’s Octane Racing Group which is the largest annual sports and tourism event in Canada. BCE Inc. (NYSE: BCE) had a strong first quarter in 2021 as its broadband additions, revenues, and network acceleration program drove the company’s momentum. Quarterly adjusted net income came in at $555.9 million or $0.62 per share. Canada. BCE Inc. (NYSE: BCE) also added 108,468 new mobile retail internet customers which is up 51% year over year. The company also announced investments of more than $1 billion to accelerate its broadband network program which is on track to reach up to 6.9 million customers by the end of 2021.
Despite uncertainties related to the COVID-19 pandemic, BCE Inc. (NYSE: BCE) expects revenues and adjusted EBITDA to grow between 2% and 5% and adjusted EPS is projected to grow between 1% and 6% in fiscal year 2021. BCE ranks 7th in our list of the best communication stocks to buy now.
Like AT&T Inc. (NYSE: T), and Vodafone Group Plc (NASDAQ: VOD), T-Mobile US, Inc. (NASDAQ: TMUS) and Verizon Communications Inc. (NYSE: VZ), BCE is one of the best communication stocks to buy now.
At the end of the fourth quarter of 2020, 13 hedge funds in the database of Insider Monkey held stakes worth $90.7 million in BCE Inc. (NYSE: BCE) which is an increase from 10 hedge funds in the previous quarter holding stakes worth $84.6 million.
6. Vodafone Group Plc (NASDAQ: VOD)
Number of Hedge Fund Holders: 17
Market Cap: $55.83 billion
Vodafone Group Plc (NASDAQ: VOD) is a telecommunication services company that operates in Europe and internationally. It was founded in 1984 and is headquartered in Newbury, United Kingdom. The company offers mobile services that enable customers to call, text, and access data; fixed line services, including broadband, television (TV) offerings etc. It has a strategic partnership with Alphabet Inc. (NASDAQ: GOOG)’s Google to jointly develop data services and a system called Dynamo which can extract and transport data across various countries. Vodafone Group Plc (NASDAQ: VOD) is planning to rake in $2.4 billion from an IPO of its European mobile-phone towers unit in Frankfurt, which is one of the region’s biggest listings in 2021 according to Bloomberg.
The total revenue for the company in 2020 amounted to $56.4 billion up from $53.05 billion in 2019 and has a diluted EPS of $1.04. According to CNN Business, The current consensus among 18 polled investment analysts is to buy Vodafone Group Plc (NASDAQ: VOD) making it one of the best communication stocks to buy now.
5. Zoom Video Communications, Inc. (NASDAQ: ZM)
Number of Hedge Fund Holders: 59
Market Cap: $85.346 billion
Zoom Video Communications, Inc. (NASDAQ: ZM) is one of the biggest beneficiaries of the COVID-19 pandemic as its revenues quadrupled to approximately $2.65 billion in 2020. The company is a provider of a video-first communications platform in the Americas, Europe, the Asia Pacific, Middle East, and Africa. The company was founded in 2011 and is headquartered in San Jose, California. It now controls over 40% of the US web conferencing share with traditional workplaces disrupted due to the ongoing pandemic. Zoom Video Communications, Inc. (NASDAQ: ZM) had a total revenue of $882.5 million in the fourth quarter of 2020 which was a 369% year-over-year increase. The full fiscal year total revenue amounted to $2.65 billion, up 326% year-over-year, according to the company’s earnings report. GAAP net income attributable to common stockholders for the fiscal year was $671.5 million, or $2.25 per share, compared to GAAP net income attributable to common stockholders of $21.7 million, or $0.09 per share for fiscal year 2020. Zoom Video Communications, Inc. (NASDAQ: ZM) is a brand-name stock with a serious upside which makes this cloud-based web conferencing company one of the best communication stocks to buy now.
4. Charter Communications, Inc. (NASDAQ: CHTR)
Number of Hedge Fund Holders: 90
Market Cap: $131.529 billion
Charter Communications, Inc. (NASDAQ: CHTR) is a broadband connectivity and cable operator company that serves residential and commercial customers in the US. Based in Stamford, Connecticut, the company serves approximately 31 million customers in 41 states. Over the past 5 years, the stock price of Charter Communications, Inc. (NASDAQ: CHTR) is up an impressive 192%. Warren Buffett’s Berkshire Hathaway has also included the company in its portfolio. As of Mar 31, 2021, Charter had 31.4 million total customer relationships, with 1.7 million net new customer relationships added over the last twelve months. Moreover, the company earned revenues of $12.5 billion in 2020 which was a 6.7% year-over-year increase. In 2021, the first quarter earnings per share amounted to $4.11 which was up 121% from the preceding year. New Street analyst Jonathan Chaplin sees Charter’s subscriber growth picking up as industrywide churn increases because it has faster speeds and a more competitive product than its competitors. The company had 27.3 million residential internet customers in 2020, up 7.4% year over year. With a strong financial performance, Charter Communications, Inc. (NASDAQ: CHTR) has been selected as one of the 10 best communication stocks to buy now.
At the end of the fourth quarter of 2020, 90 hedge funds in the database of Insider Monkey held stakes worth $11.2 billion in Charter which is an increase from 88 hedge funds in the preceding quarter holding stakes worth $11.9 billion.
Avenir Capital said in its letter that Charter Communications, Inc. (NASDAQ: CHTR) was one of their biggest gainers. Here is what Avenir Capital has to say about Charter Communications in its letter:
“Our third biggest gainer was Charter Communications, the U.S. broadband connectivity business. Our opportunity to buy Charter came in early 2018 when the business was sold off heavily on fears of cable TV cord cutting and the impact of streaming businesses such as Netflix on traditional cable. We felt the bulk of Charter’s underlying value came from its broadband internet business, a highly concentrated industry in which Charter holds a dominant position, not the traditional cable TV business. Charter’s share price has increased by 112% since our initial purchase at US$313 per share, including an increase of 35% in 2020 to end the year at US$665 per share.”
3. T-Mobile US, Inc. (NASDAQ: TMUS)
Number of Hedge Fund Holders: 103
Market Cap: $170.782 billion
T-Mobile US, Inc. (NASDAQ: TMUS) is a provider of mobile communication services in the US, Puerto Rico, and the United States Virgin Islands. The company offers voice, messaging and data services and have over 102.1 million customers in the prepaid, postpaid, and wholesale markets. It was founded in 1994 and is based in Bellevue, Washington. According to Oppenheimer analyst Tim Horan, the TMUS stock is performing very well and is outperforming its competitors in the telecom sector. T-Mobile US, Inc. (NASDAQ: TMUS) delivered leading postpaid phone net additions and with its acquisition of Sprint, its customer traffic has greatly increased. Additionally, 2021 is expected to be a peak investment year for the company as it invests in a 5G network. Sprint merger integration and customer acquisition make it one of the best communication stocks to buy now. Furthermore, T-Mobile has also announced marketing collaborations with Alphabet Inc. (NASDAQ: GOOG)’s Google. With the acquisition of Sprint, the new T-Mobile owns more mid-band radio spectrum than AT&T or Verizon which could provide an important edge as 5G wireless services are rolled out. The company’s revenue rose 78% to $19.76 billion in 2020 with an earnings per share of $2.65. In 2020, it is forecasted that T-Mobile US, Inc. (NASDAQ: TMUS) will be able to reach 250 million people with its mobile 5G network.
At the end of the fourth quarter of 2020, 103 hedge funds in the database of Insider Monkey held stakes worth $9.1 billion in the firm which is an increase from 94 hedge funds in the previous quarter holding stakes worth $7.5 billion.
2. AT&T Inc. (NYSE: T)
Number of Hedge Fund Holders: 58
Market Cap: $233.133 billion
AT&T Inc. (NYSE: T) was incorporated in 1983 and is headquartered in Dallas, Texas. It provides telecommunication, technology, and media services worldwide. AT&T Inc. (NYSE: T) beat Wall Street revenue targets as the reopening of the U.S. economy following pandemic-linked restrictions boosted smartphone sales and the media business. The company reported that it had added 595,000 net wireless phone subscribers in the first quarter of 2021, more than double what analysts had expected. AT&T has been investing heavily in its new 5G wireless network and bundling its streaming service HBO Max for free with certain phone plans to retain customers and keep them from switching to competitors. Revenue for the company was up nearly 3% at $43.9 billion and this momentum is expected to continue as the US economy reopens. It also added 800,000 postpaid wireless phone customers vs. estimates for a 414,000 gain. AT&T Inc. (NYSE: T) also signed a five-year contract with Nokia Corporation (NYSE: NOK) to deploy a 5G network on the company’s C-Band spectrum in different parts of the United States. With a market cap of $233.133 billion the company has landed a top spot in our 10 best communication stocks to buy now list.
At the end of the fourth quarter of 2020, 58 hedge funds in the database of Insider Monkey held stakes worth $1.04 billion in the firm.
Nelson Capital Management, in its Q1 2021 investor letter, mentioned AT&T Inc. (NYSE: T). Here is what Nelson Capital Management has to say about AT&T Inc. in its letter:
“Nelson Capital stayed busy i n t he first quarter, making several adjustments within our core portfolio. In the communication services sector, we sold AT&T (tkr: T). Over the years, AT&T has made several poor acquisitions, especially in the content realm, leaving the company saddled with debt and unable to change directions.”
1. Verizon Communications Inc. (NYSE: VZ)
Number of Hedge Fund Holders: 67
Market Cap: $247.445 billion
Verizon Communications Inc. (NYSE: VZ) is a New York-based communications company that provides its services to consumers worldwide. As of 2020, the company had more than 94 million wireless retail connections, 4 million Fios video connections, and 482 million broadband connections making it one of the leading companies in the telecom sector. Verizon Communications Inc. (NYSE: VZ) has recently announced its partnership with the Oak View Group to bring the power of 5G ultra wideband to select world-class OVG venues including the New York UBS Arena, Coachella Valley Arena, and the Seattle Climate Pledge Arena. Verizon Communications Inc. (NYSE: VZ) also provides businesses with Internet of Things connectivity in 170 countries worldwide. The company has shown strong financial performance in the recent years. In the fourth quarter of 2020, Verizon reported earnings of $1.11 per share resulting in full year earnings of $4.30 per share. Adjusted EBITDA for the quarter was $11.7 billion as compared to $11.1 billion last year which is a 5.3% increase driven by service and other revenue growth. The company’s full year consolidated adjusted EBITDA totaled $47.1 billion and adjusted EBITDA margin was 36.7%, 90 basis points higher than 2019. The company also added Discovery to their list of partnerships which includes Apple and Disney as well. Verizon had a strong year which puts it in a good position going into 2020 and makes it one of the best communication stocks to buy now.
At the end of the fourth quarter of 2020, 67 hedge funds tracked by Insider Monkey held stakes worth $10.5 billion in the firm which is an increase from 65 hedge funds in the preceding quarter holding stakes worth $2.75 billion.
You can also take a peek at 10 Best Wind Energy and Renewables Stocks to Buy in 2021 and 10 Best Video Conferencing Stocks to Buy.
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Disclosure: None. 10 Best Communication Stocks to Buy Now is originally published on Insider Monkey.
