In this article, we discuss the 12 best communication stocks to buy today.
The communications industry has grown from a sector that used to include just telecommunications, newspapers, magazines, books, and radio and television broadcasting to one that also encompasses the world of internet and software-as-a-service providers. On a global level, it is one of the biggest and most stable businesses. Over the past year, the incredible rise in demand for higher-speed networks, partially as a result of more businesses going digital, has resulted in huge fiber and wireless deployments.
As a new year beckons, there is an emerging set of issues and opportunities presented by a dynamic regulatory, technological, and competitive environment that may influence progress in the communications space. Per a report by research firm Deloitte, the biggest trends shaping the telecommunications industry are more competitive broadband markets and cybersecurity in the 5G era. The Economist Intelligence Unit claims that artificial intelligence will continue to develop after several breakthroughs in the area too.
These growth trends are also reflected in governmental policies. For example, the United States government recently passed a $1 trillion infrastructure bill that has earmarked over $65 billion for the upgradation of broadband networks across the country, boosting communications stocks. The software side in the business is growing rapidly, some estimates place the annual growth of this sub-space in the communications sector at more than 6%. There is also spending on expanded options for high-quality communication and internet services.
The enterprise market for private cellular networks and edge computing is gaining momentum as well. The market is still nascent but promises to be competitive in near future. Network operators will have to compete against each other as well as new players, who may prove key partners in delivering future tech solutions. While the widespread adoption of 5G offers many benefits, it also creates new security concerns and challenges. The operators have taken steps to evaluate and minimize threats arising from 5G and software-centric networks.
Taking advantage of the situation, they are in a unique position to offer 5G security services to enterprises seeking to deploy their own advanced wireless networks. The challenges outlined can be overcome by reevaluating business models in terms of both service offerings and geographies. Companies can also look for ways to differentiate services on non-performance attributes. Some of the top firms in the sector include T-Mobile US, Inc. (NASDAQ:TMUS), Charter Communications, Inc. (NASDAQ:CHTR), and Alphabet Inc. (NASDAQ:GOOG).
Our Methodology
These communication stocks are extremely popular among the 920 elite hedge funds tracked by Insider Monkey. They also have strong analyst ratings from the Wall Street and have long-term growth potential.
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Best Communication Stocks To Buy Today
12. Chunghwa Telecom Co., Ltd. (NYSE:CHT)
Number of Hedge Fund Holders: 5
Chunghwa Telecom Co., Ltd (NYSE:CHT) provides telecommunication services in Taiwan and internationally. On November 1, Chunghwa Telecom posted earnings for the third quarter of 2022, reporting earnings per share of NT$1.20. The revenue over the period was NT$53.51 billion, up 5.1% compared to the revenue over the same period last year.
At the end of the third quarter of 2022, 5 hedge funds in the database of Insider Monkey held stakes worth $123.6 million in Chunghwa Telecom Co., Ltd (NYSE:CHT), compared to 6 in the previous quarter worth $152.5 million.
11. TELUS Corporation (NYSE:TU)
Number of Hedge Fund Holders: 19
TELUS Corporation (NYSE:TU) provides a range of telecommunications and information technology products and services in Canada. On October 27, Telus said that it has agreed to acquire Charlottesville, a Virginia-based digital product provider from WillowTree for a total enterprise value of $1.225 billion. The consideration is inclusive of $210 million of assumed debt, of which $125 million will be settled in TU subordinate voting shares.
On November 8, investment advisory BMO Capital maintained an Outperform rating on TELUS Corporation (NYSE:TU) stock and lowered the price target to C$35 from C$37. Analyst Keith Bachman issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in TELUS Corporation (NYSE:TU) with 3.4 million shares worth more than $67.9 million.
10. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 32
Nexstar Media Group, Inc. (NASDAQ:NXST) is a television broadcasting and digital media company that focuses on the acquisition, development, and operation of television stations and interactive community websites and digital media services in the United States. On November 8, Nexstar Media posted earnings for the third quarter of 2022, reporting earnings per share of $7.30, beating market estimates by $1.89. The revenue over the period was $1.27 billion, up 9.5% compared to the revenue over the same period last year and missing market estimates by $20 million.
On November 11, Barrington analyst James Goss maintained an Outperform rating on Nexstar Media Group, Inc. (NASDAQ:NXST) stock and lowered the price target to $200 from $240, highlighting that the company reported third-quarter revenues below estimates and EBITDA that was slightly lower due to the miss on revenues.
At the end of the third quarter of 2022, 32 hedge funds in the database of Insider Monkey held stakes worth $685.8 million in Nexstar Media Group, Inc. (NASDAQ:NXST), compared to 33 in the preceding quarter worth $779 million.
In its Q1 2022 investor letter, Richie Capital Group, an asset management firm, highlighted a few stocks and Nexstar Media Group, Inc. (NASDAQ:NXST) was one of them. Here is what the fund said:
“Nexstar Media Group (NXST up 24.8%) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. NXST is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”
9. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 40
DISH Network Corporation (NASDAQ:DISH) provides pay-TV services in the United States. On November 7, Dish Network Corp priced a $2 billion offering of its 11.75% senior secured notes due 2027. The notes will be issued at 98.171% of the principal amount.
On November 4, Citi analyst Michael Rollins maintained a Buy rating on DISH Network Corporation (NASDAQ:DISH) stock and lowered the price target to $33 from $34, highlighting that the quarter saw continued progress on the 5G network built by the firm.
At the end of the third quarter of 2022, 40 hedge funds in the database of Insider Monkey held stakes worth $776.7 million in DISH Network Corporation (NASDAQ:DISH), compared to 41 in the preceding quarter worth $936.9 million.
8. Altice USA, Inc. (NYSE:ATUS)
Number of Hedge Fund Holders: 42
Altice USA, Inc. (NYSE:ATUS) provides broadband communications and video services in the United States, Canada, Puerto Rico, and the Virgin Islands. On November 2, Altice USA posted earnings for the third quarter of 2022, reporting earnings per share of $0.19, missing market estimates by $0.16. The revenue over the period was $2.39 billion, down 7.0% compared to the revenue over the same period last year and missing market estimates by $60 million.
On November 9, Deutsche Bank analyst Bryan Kraft maintained a Hold rating on Altice USA, Inc. (NYSE:ATUS) stock and lowered the price target to $6 from $9, highlighting that the company’s results for the third quarter can be summarized as a slight worsening of trends from a competitive point of view.
Among the hedge funds being tracked by Insider Monkey, New York-based firm HG Vora Capital Management is a leading shareholder in Altice USA, Inc. (NYSE:ATUS) with 15 million shares worth more than $87.5 million.
In its Q2 2022 investor letter, MPE Capital, an asset management firm, highlighted a few stocks and Altice USA, Inc. (NYSE:ATUS) was one of them. Here is what the fund said:
“Two (very) costly mistakes I’ve made over the last twelve months have been my investments in Altice USA, Inc. (NYSE:ATUS) and Poshmark. Both are down over 50% from my initial purchase price. I not only poorly appraised business quality; I also incorrectly appraised the intrinsic value of both of these companies. It should rarely end up being the case that we pay over intrinsic value, in the worst case we should never lose money on an investment. I will dive into one of these mistakes below and maybe dive into the other in a future letter. My thinking when buying Altice USA was that they operate as a duopoly in their main footprint, the New York Tri-State area. They provide a needs-based service: internet, video, and voice services. I figured this is a very stable business with high barriers to entry. Management seemed competent as well based on historical capital allocation decisions. I didn’t fully appreciate at the time how poorly positioned they were relative to Verizon Fios, as well as how fiercely competitive the business can get on promotions and customer acquisition.
Altice offers hybrid fiber coaxial (HFC) while Fios offers fiber-to-the-home (FTTH). FTTH is a far superior product, which has led to some share loss to Fios in the parts of their footprint that overlap. There have also been some subscriber losses in their other footprint due to new cable entrants and fixed wireless offerings.
My original thinking was that the video business will go to zero over time due to continued pressure from services like Netflix. In hindsight, I overstated their free cash flows excluding the video business due to difficulties disaggregating their business results. This FCF delta is a huge contributor to the difference between my current and original estimates of intrinsic value. Now, it’s possible that the video business doesn’t go to zero; however, I have a hard time envisioning that many households in ten years will still subscribe to linear television.
After losing some subscribers and facing some headwinds, they are now reinvesting many billions over the next few years to fiberize the majority of their footprint. I think this is a great plan and it will hopefully cement their position as a true duopoly in the New York TriState area. However, in their other major footprint, new fiber entrants are coming in and competition will only intensify. There are also some new entrants entering this space like Starlink satellite internet and fixed wireless internet from tier-one mobile carriers. I think these will generally be more expensive and inferior to FTTH; however, they may end up putting some pricing pressure on Altice over time.”
7. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 61
AT&T Inc. (NYSE:T) provides telecommunications, media, and technology services worldwide. On November 2, AT&T revealed that it is expanding its existing credit facility to $12 billion from $7.5 billion. The company said that advances would be used for general corporate purposes. It is also amongst the most notable dividend-paying stocks in the market.
On October 24, Raymond James analyst Frank Louthan upgraded AT&T Inc. (NYSE:T) stock to Strong Buy from Outperform with an unchanged price target of $24, noting that the company will outperform Verizon over the coming several months based on the current operating performance between two companies.
At the end of the third quarter of 2022, 61 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in AT&T Inc. (NYSE:T), compared to 55 in the previous quarter worth $1.7 billion.
In its Q2 2022 investor letter, Chartwell Investment Partners, an asset management firm, highlighted a few stocks and AT&T Inc. (NYSE:T) was one of them. Here is what the fund said:
“In the Dividend Equity accounts, the three best performers in Q2 include AT&T (NYSE:T, 2.5%), up 17.1%. AT&T completed the spin of the WarnerMedia business (HBO, CNN, etc.), and the market seemed to like the “back-to-basics” approach. Also, the telco business is expected to do relatively well in an inflationary environment.”
6. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 62
Verizon Communications Inc. (NYSE:VZ) offers communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. On December 1, Verizon Communications declared a quarterly dividend of $0.6525, in line with the previous and the forward yield was 6.83%.
On October 26, Morgan Stanley analyst Simon Flannery maintained an Equal Weight rating on Verizon Communications Inc. (NYSE:VZ) stock and lowered the price target to $41 from $58, highlighting that the firm was able to avoid another guidance cut but investors still have questions about the forward strategy given struggles to grow the consumer postpaid phone base in a strong wireless market.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Verizon Communications Inc. (NYSE:VZ) with 8 million shares worth more than $304.6 million.
Alongside T-Mobile US, Inc. (NASDAQ:TMUS), Charter Communications, Inc. (NASDAQ:CHTR), and Alphabet Inc. (NASDAQ:GOOG), Verizon Communications Inc. (NYSE:VZ) is one of the best communications stocks to buy today according to elite investors.
In its Q3 2022 investor letter, Mawer Investment Management, an asset management firm, highlighted a few stocks and Verizon Communications Inc. (NYSE:VZ) was one of them. Here is what the fund said:
“There are a few other segments of our portfolios that displayed weakness in the quarter. Cable and telecommunication companies have been an area that has lagged behind the broader market as their worlds are increasingly colliding. Companies such as Verizon (NYSE:VZ) have been impacted as the wireless operator is spending heavily to attract internet subscribers with fixed wired access and the cable companies are trying to build wireless businesses.”
5. Charter Communications, Inc. (NASDAQ:CHTR)
Number of Hedge Fund Holders: 68
Charter Communications, Inc. (NASDAQ:CHTR) operates as a broadband connectivity and cable operator company serving residential and commercial customers in the United States. On November 2, Charter Communications said that Comcast and Charter Communications have named their streaming platform joint venture Xumo – repurposing the name of Comcast’s free ad-supported streaming service into a bigger ecosystem.
On October 31, Truist analyst Greg Miller maintained a Hold rating on Charter Communications, Inc. (NASDAQ:CHTR) stock and lowered the price target to $380 from $450, highlighting that the company’s third-quarter results were mixed as it reported high mobile net additions, though its legacy businesses are seen in perpetual decline.
At the end of the third quarter of 2022, 68 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Charter Communications, Inc. (NASDAQ:CHTR), compared to 68 in the preceding quarter worth $5.7 billion.
In its Q3 2022 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Charter Communications, Inc. (NASDAQ:CHTR) was one of them. Here is what the fund said:
“Liberty Broadband’s primary asset is a 26% stake in Charter Communications (NASDAQ:CHTR). Charter is not sitting still; the company is adapting via footprint expansion into underserved areas, price-advantaged mobile line growth, and so on. Charter’s hefty free cash flows are valuable in the hands of proven, astute capital allocators. Time will tell, but to paraphrase country music artist Merle Haggard, we do not yet think cable’s good times are really over for good.”
4. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 73
Comcast Corporation (NASDAQ:CMCSA) operates as a media and technology company worldwide. On October 28, Comcast Corporation (NASDAQ:CMCSA) posted earnings for the third quarter of 2022, reporting earnings per share of $7.38, missing market estimates by $0.91. The revenue over the period was $13.6 billion, up 3.5% compared to the revenue over the same period last year and missing market estimates by $70 million.
On October 28, Cowen analyst Gregory Williams maintained an Outperform rating on Comcast Corporation (NASDAQ:CMCSA) stock and lowered the price target to $49 from $51, highlighting that the company is aiming to extract ARPU, a risky strategy, but is also concentrating on Mobile Business Services and margins.
Among the hedge funds being tracked by Insider Monkey, New York-based firm First Eagle Investment Management is a leading shareholder in Comcast Corporation (NASDAQ:CMCSA) with 31.6 million shares worth more than $928 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Comcast Corporation (NASDAQ:CMCSA) was one of them. Here is what the fund said:
“Weakness among our holdings in the communication services sector was the other detractor to performance. Comcast Corporation (NASDAQ:CMCSA) was hurt by tepid subscriber growth in its broadband business but demonstrated strong growth in free cash flow, positioning the company for accelerated capital return going forward.”
3. T-Mobile US, Inc. (NASDAQ:TMUS)
Number of Hedge Fund Holders: 100
T-Mobile US, Inc. (NASDAQ:TMUS) provides mobile communications services in the United States, Puerto Rico, and the United States Virgin Islands. On November 29, T-Mobile said that it has entered into an exclusive agreement with Telecom firm ExteNet Systems to deploy digital wireless infrastructure in large sports, entertainment, hospitality and transportation venues. The agreement is expected to deliver best-in-class wireless communication on commercial sites.
On November 15, Tigress Financial analyst Ivan Feinseth maintained a Buy rating on T-Mobile US, Inc. (NASDAQ:TMUS) stock and raised the price target to $202 from $195, highlighting that the company will acquire more customers and boost its income as it can better utilise its huge 5G high-speed network.
Among the hedge funds being tracked by Insider Monkey, Omaha, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in T-Mobile US, Inc. (NASDAQ:TMUS) with 5.2 million shares worth more than $703.3 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and T-Mobile US, Inc. (NASDAQ:TMUS) was one of them. Here is what the fund said:
“As mentioned, the communication services sector has come under some pressure, and irrational pricing competition has negatively impacted wireless industry growth and profitability of late, weighing on T-Mobile US, Inc. (NASDAQ:TMUS). Faced with these headwinds, and with pressure from other wireless carriers and cable companies that could cause the company to cede share in subscriber growth in 2022, we exited our position in the fourth quarter.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Alphabet Inc. (NASDAQ:GOOG) provides various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. The firm features on the list of best communications stocks since it provides social media platforms, hardware devices, and software services which people use to communicate across the world.
On November 30, Societe Generale analyst Christophe Cherblanc maintained a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and lowered the price target to $132 from $147, highlighting that cost management has risen to the top of the priority list for technology investors.
At the end of the third quarter of 2022, 156 hedge funds in the database of Insider Monkey held stakes worth $19.3 billion in Alphabet Inc. (NASDAQ:GOOG), compared to 153 in the preceding quarter worth $22.3 billion.
In its Q3 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?
“Google it!”
This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.
Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to something. Second, the reason Biden’s advice was met with such opprobrium was that Googling something has become almost second nature to us now.
These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking the information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.
Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate as well as that from its other properties such as Mail, Maps, and so on, totalled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…read more
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 177
Meta Platforms Inc. (NASDAQ:META) develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, wearables, and in-home devices worldwide. On September 20, the company announced that it was planning to integrate the WhatsApp messaging service, used by billions around the world for communication purposes, with the business services of Salesforce to help businesses chat directly with their customers. No other firm has as many customers that use their products for communication services. The company also has a low PE Ratio, adding to the value proposition of the stock. It is investing heavily in new tech like the metaverse as well, adding to the long-term allure of the shares. The company is trading at 11.65x earnings and 10.71x free cash flow and is slated for growth in the core social media business as it innovates, particularly through Reels that are competing with TikTok. The firm has a free cash-flow yield that is better than competitors.
On September 12, Piper Sandler analyst Thomas Champion maintained a Neutral rating on Meta Platforms, Inc. (NASDAQ:META) stock and lowered the price target to $175 from $190, noting that checks indicated app tracking transparency headwinds were significant for the firm.
At the end of the third quarter of 2022, 177 hedge funds in the database of Insider Monkey held stakes worth $14 billion in Meta Platforms, Inc. (NASDAQ:META), compared to 184 the preceding quarter worth $18 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:
“Shares of Meta Platforms, Inc. (NASDAQ:META), the owner of Facebook, the world’s largest social network, fell 28.4% during the second quarter due to quarterly results that missed consensus estimates, driven by the impact of Apple’s new privacy changes in its iOS operating system. These changes have made it harder for Facebook to measure the effectiveness of its advertising across its mobile apps.
In the longer term, we expect Facebook to continue utilizing its leadership in mobile to provide global advertisers targeted marketing capabilities at scale, with substantial monetization optionality ahead in newer areas such as Reels (Meta’s competing solution to TikTok) and e-commerce.”
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Disclosure. None. 12 Best Communication Stocks To Buy Today is originally published on Insider Monkey.
