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11 Best Communication Stocks To Buy Now

In this article, we will be taking a look at the 11 best communication stocks to buy now. To skip our detailed analysis of the communications sector, you can go directly to see the 5 Best Communication Stocks To Buy Now.

The communications service sector is traditionally considered to include only media and broadcasting companies. However, in recent times, the sector has become more diversified with the inclusion of several technology companies as well. The Global Industry Classification Standard launched a new communication services sector in September 2018, and this is what brought about the change in what is classified as communications stocks. As a result of this new sector categorization, even some of the FANG stocks — Facebook (Meta Platforms (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Netflix, Inc. (NASDAQ:NFLX) — joined the communication services sector. The inclusion of these stocks in the sector highlights the inherent diversity of the communications sector, which was then turned into one of the largest sectors in the S&P 500.

According to a Baron Funds report on the communications sector published in October 2018, with the above-mentioned changes, this sector became the sixth-largest sector in the S&P 500, accounting for about 9% of the index by weight. The inclusion of mega tech companies alongside traditional communication services companies like AT&T Inc. (NYSE:T), Verizon Communications (NYSE:VZ), and  T-Mobile US, Inc. (NASDAQ:TMUS) meant that the communication sector was one that was ever-expanding. Today, it includes media, broadcasting, entertainment, telecommunications, and even technology companies. This diversification may be why the sector has been performing well in 2023. In January, the S&P 500 communication services sector rose by about 12.7%, while the broader benchmark rose by merely 6.6%, for instance.

A major reason for the expansion and continued growth of the communications sector is the COVID-19 pandemic, as illustrated by the examples of the social media, streaming services, and mobile connectivity areas within communication services. The pandemic revolutionized the communications sector and led to a growth in the number of mobile subscribers in 2020. According to a GSM Association report published in 2020, the number of mobile connections rose from 5.2 billion at the end of 2019 to 7.9 billion in the first quarter of 2020. The growing use of enterprise messaging, online meetings, and online team collaborations since 2020 has also led to forecasts expecting the Unified Communication as a Service (UCaaS) market to grow exponentially. In 2024, this market is expected to be valued at $24.8 billion, growing at a compound annual growth rate of 9.5% between 2020 and 2024.

This growth has been aided by governmental support for the communications sector. In a previous article, we mentioned how in 2021, the US government passed a $1 trillion infrastructure bill that earmarked over $65 billion to upgrade broadband networks across the country. A year after this bill was passed, the Federal Communications Commission (FCC) was able to launch the Affordable Connectivity Program, which lowered the cost of high-speed internet services by $30 per month.

Additionally, the US Department of Commerce also launched a $42 billion Broadband Equity, Access and Deployment (BEAD) Program to further increase governmental support for the communications sector. With this immense growth, investors today are increasingly attracted to communications stocks, leading us to compile a list of the best stocks in this sector to buy today.

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Let’s now take a look at the 11 best communication stocks to buy now.

Our Methodology

We selected our list of the best communication stocks by considering hedge fund sentiment. The stocks selected are popular among the 943 hedge funds tracked by Insider Monkey in the fourth quarter. They also have positive ratings from financial analysts, and price targets suggesting upside potential according to TipRanks. The stocks are ranked on the basis of the number of hedge funds holding stakes in them, from the lowest to the highest number.

Best Communication Stocks To Buy Now

11. TELUS International (NYSE:TU)

Number of Hedge Fund Holders: 17

TELUS International (NYSE:TU) is a communication services company based in Vancouver, Canada. The company offers telecommunications and information technology products and services. It operates through its Technology Solutions and Digitally-Led Customer Experiences Segments.

Sebastiano Petti at JPMorgan holds an Overweight rating on TELUS International (NYSE:TU) shares as of February 13.

TELUS International (NYSE:TU) is one of the three largest telecom providers in Canada, accounting for about 90% of the country’s $53 billion telecommunications market. According to TipRanks, analysts on Wall Street rate the stock as a Strong Buy. The average price target on the stock is $22.43, with a high forecast of $23.96, as of March 22. TELUS International (NYSE:TU) was trading at $19.79 on the same date, and this gives the stock an upside potential of 13.34%.

There were 17 hedge funds long TELUS International (NYSE:TU) in the fourth quarter, with a total stake value of $255 million.

TELUS International (NYSE:TU), like AT&T Inc. (NYSE:T), Verizon Communications (NYSE:VZ), and  T-Mobile US, Inc. (NASDAQ:TMUS), is a communications services stock many elite hedge funds are piling into today.

10. Nexstar Media Group, Inc. (NASDAQ:NXST)

Number of Hedge Fund Holders: 31

Nexstar Media Group, Inc. (NASDAQ:NXST) is a broadcasting company providing digital media and more. The company focuses on the acquisition, development, and operation of TV stations and interactive community websites. It offers free programming to TV-viewing audiences.

Guggenheim’s Curry Baker holds a Buy rating and a $22o price target on Nexstar Media Group, Inc. (NASDAQ:NXST) shares as of January 19.

The company owns 200 TV stations across over 100 different American media markets. As a result, while most broadcasting companies might be struggling today, Nexstar Media Group, Inc. (NASDAQ:NXST) is thriving. Between 2019 and 2023, the shares have risen by 151.35%. As of March 22, the company also has a dividend yield of 3.31%. Nexstar Media Group, Inc. (NASDAQ:NXST) has raised its dividend for the past nine years in a row, making it a reliable passive income investment as well.

Cardinal Capital was the largest shareholder in Nexstar Media Group, Inc. (NASDAQ:NXST) at the end of the fourth quarter, holding 943,570 shares. In total, 31 hedge funds were long the stock, with a total stake value of $458 million.

9۔ DISH Network Corporation (NASDAQ:DISH)

Number of Hedge Fund Holders: 37

DISH Network Corporation (NASDAQ:DISH) is a cable and satellite company based in Englewood, Colorado. The company provides pay-TV services in the US. It operates through its Pay-TV and Wireless segments.

As of March 13, Michael Rollins at Citigroup holds a Buy rating on DISH Network Corporation (NASDAQ:DISH) shares.

DISH Network Corporation (NASDAQ:DISH) has been working to increase its 5G network coverage in the US. By the third quarter, the company has constructed 10,000 sites capable of providing coverage to 35% of the US population. In January, DISH Network Corporation (NASDAQ:DISH) disclosed that it had begun constructing 15,000 more 5G sites to provide broadband coverage to over 60% of the population. According to TipRanks, analysts on Wall Street have an average price target of $18.33 on the shares, which were trading at $9.58 as of March 22. This gives the stock an upside potential of 91.34%.

DISH Network Corporation (NASDAQ:DISH) was found among the 13F holdings of 37 hedge funds in the fourth quarter. Their total stake value was $617 million.

8۔ Twilio Inc. (NYSE:TWLO)

Number of Hedge Fund Holders: 48

Twilio Inc. (NYSE:TWLO) is a provider of software and communications solutions in the US and internationally. The company is based in San Francisco, California, and operates cloud communications platforms enabling developers to build, scale, and operate customer engagement in software applications.

T. Michael Walkley, an analyst at Canaccord, holds a Buy rating on Twilio Inc. (NYSE:TWLO) shares as of March 22. The analyst also raised his price target on the stock from $88 to $97.

Twilio Inc. (NYSE:TWLO) is the communications services company behind the integration of OpenAI’s GPT-3 model since 2020. As such, the company may be set to benefit from the tailwinds in the AI industry, especially since the rise of ChatGPT. Twilio Inc. (NYSE:TWLO) saw its revenue increase by 21.58% year-over-year in the fourth quarter, coming in at $1.02 billion. Revenue from its Data & Applications segment increased even faster, by 25% year-over-year, coming in at $118 million.

ARK Investment Management was the largest shareholder in Twilio Inc. (NYSE:TWLO) at the end of the fourth quarter, holding 7.4 million shares. A total of 48 hedge funds were long the stock in that quarter, with a total stake value of $1.5 billion.

RiverPark Advisors, an investment advisory firm, mentioned Twilio Inc. (NYSE:TWLO) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

Twilio Inc. (NYSE:TWLO): TWLO was also a top detractor for the quarter. Despite better-than-expected 3Q results, management provided 4Q guidance well below expectations and lowered its long-term organic revenue growth expectations from 30% to 15%-25%. A key component of these lowered expectations was the company’s failure to execute in enterprise software sales, which was a fundamental part of our investment thesis, so we exited the position during the quarter.”

7۔ AT&T Inc. (NYSE:T)

Number of Hedge Fund Holders: 55

AT&T Inc. (NYSE:T) is an integrated telecommunication services company based in Dallas, Texas. The company operates through its Communications and Latin America segments. It offers wireless voice and data communications, handsets, wireless data cards, and more.

On January 24, Citigroup’s Michael Rollins reiterated a Buy rating on AT&T Inc. (NYSE:T) shares.

Over the past three years, AT&T Inc. (NYSE:T) has grown its revenue at an annualized rate of 3.4%, from $112.5 billion to $120.2 billion. From 2020 to 2022, the company’s sales expanded from $72.6 billion to $81.8 billion. Analysts on Wall Street consider AT&T Inc. (NYSE:T) to be a Moderate Buy, according to TipRanks. The average price target on the stock is $22.11, while the shares were trading at $18.54 on March 22. This gives the stock an upside potential of 19.26%.

Our hedge fund data shows 55 funds long AT&T Inc. (NYSE:T) in the fourth quarter, with a total stake value of $1.6 billion.

6۔ Verizon Communications (NYSE:VZ)

Number of Hedge Fund Holders: 56

Verizon Communications (NYSE:VZ) is another integrated telecommunication services company on our list. The company provides technology, information, and entertainment products and services. It operates through its Verizon Consumer Group (Consumer) and Verizon Business Group (Business) segments.

Gregory Williams at Cowen holds an Outperform rating on Verizon Communications (NYSE:VZ) shares as of January 25.

Verizon Communications (NYSE:VZ) is a highly reliable dividend stock, having raised its yield for the past 18 years in a row. The company also has a dividend yield of 6.92% as of March 22, making it more attractive. According to TipRanks, the average price target on Verizon Communications (NYSE:VZ) shares is $45.30, while the stock was trading at $37.74 on March 22. This gives the shares an upside potential of 20.03%.

Out of the 56 hedge funds long Verizon Communications (NYSE:VZ) in the fourth quarter, Citadel Investment Group was the largest shareholder in the company, holding 10.1 million shares. The total stake value in the company was $1.5 billion.

Verizon Communications (NYSE:VZ), like AT&T Inc. (NYSE:T) and  T-Mobile US, Inc (NASDAQ:TMUS), is among the most popular communications stocks on the market today.

Click to continue reading and see the 5 Best Communication Stocks To Buy Now.

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Disclosure: None. 11 Best Communication Stocks To Buy Now is originally published on Insider Monkey.

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