In this article we will list the 5 Best Telecom Companies to Invest In. For our detailed industry coverage as well as a more comprehensive list, please visit 10 Best Telecom Companies to Invest In.
5. ARISTA NETWORKS INC
Number of HFs: 59
ARISTA NETWORKS INC (ANET) is based in Santa Clara, California, Arista Networks, Inc. (ANET) specializes in offering cloud networking solutions. As of November 24, 2023, the closing stock price for Arista Networks, Inc. (ANET) stood at $218.39 per share. Over the past month, the company experienced a return of 12.63%, and its shares have appreciated by 62.97% in value over one year. The market capitalization of Arista Networks, Inc. (NYSE: ANET) is currently $67.941 billion.
Madison Mid Cap Fund said the following about Arista Networks, Inc. (NYSE:ANET) in its Q3 2023 investor letter:
“In the third quarter, the top five contributors were Arch Capital Group, Arista Networks Inc. (NYSE:ANET), Liberty Broadband, CDW, and Progressive. Arista Networks is benefiting from robust revenue and earnings growth as demand from its core ‘Cloud Titan’ customers continues at a strong rate, and its emerging enterprise business takes market share. Further, the company is well positioned to benefit from investment in AI infrastructure.”
4. CISCO SYSTEMS INC
Number of HFs: 64
Cisco Systems Inc. (NASDAQ:CSCO) is a multinational technology company based in San Jose, California, known for its global leadership in networking and IT infrastructure solutions. Established in December 1984 by Leonard Bosack and Sandy Lerner, Cisco has been a key player in shaping the Internet and advancing networking technologies.
As of November 21, 2023, Cisco Systems Inc (NASDAQ: CSCO) reported its quarterly results, highlighting its continued success in the networking equipment sector. The company reported a year-over-year revenue increase from $13.6 billion to $14.7 billion, accompanied by a rise in net income from $2.67 billion to $3.64 billion. Cisco’s financial strength underscores its market leadership and strategic endeavors. Notably, the company’s emphasis on software and subscription models reflects an adaptation to changing industry consumption patterns, suggesting potential sustained growth. However, Cisco faces challenges in the competitive landscape and supply chain dynamics, requiring strategic navigation to maintain its leadership position.
Oakmark Fund said the following about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2023 investor letter:
“Cisco Systems, Inc. (NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”
A telecommunications tower in a rural setting, showing the reach of cloud telecom services.
3. COMCAST CORP
Number of HFs: 68
CMCSA ranks third on our list of the best telecom companies to invest in. Comcast Corporation (CMCSA) is a diversified global media and technology company, offering cable television, high-speed internet, and phone services to both residential and business customers. The company has a notable track record, providing a quarterly dividend of $0.29 per share and consistently increasing payouts for 15 consecutive years. As of November 24,2023, the stock carries a dividend yield of 2.72%.
At the close of Q3 2023, ownership by hedge funds in Comcast Corporation increased to 68, up from 66 in the preceding quarter, as reported by Insider Monkey’s database. The combined value of these holdings surpassed $3.6 billion, with First Eagle Investment Management leading as the primary stakeholder, holding approximately 32 million shares in Q3.
Comcast Corporation (NASDAQ:CMCSA) has recently witnessed a significant insider sale that has caught the attention of investors and market analysts. Jason Armstrong, the Chief Financial Officer of Comcast Corp, sold a total of 41,663 shares of the company on November 20, 2023. This transaction has prompted a closer look into the insider’s trading behavior and its potential implications for the stock’s performance.
ClearBridge Large Cap Value Strategy made the following comment about Comcast Corporation (NASDAQ:CMCSA) in its Q3 2023 investor letter:
“Long-term holdings Charter and Comcast Corporation (NASDAQ:CMCSA) delivered strong second-quarter results relative to expectations; their stable recurring revenue streams and undemanding valuations were rewarded in the current environment. Cable multiples compressed over the past 24 months on fears of heightened competition in their core broadband business from fixed wireless and fiber providers. While fiber remains a competitive alternative to cable broadband over the long term, high upfront investments and a materially higher cost of capital are resulting in slower buildouts than previously expected. Fixed wireless also continues to gain traction, particularly in rural markets, but share gains also appear to be moderating. At the same time, both Comcast and Charter are expanding their footprints into rural and adjacent markets while gaining wireless market share, leveraging their mobile virtual network operator agreements with Verizon. We think both cable companies are well-positioned to continue to grow while generating substantial free cash flows. We added to Comcast during the quarter.”
2. CHARTER COMMUNICATIONS INC
Number of HFs: 73
CHARTER COMMUNICATIONS share returned nearly 20 percent YTD as compared to T-Mobile 6.41 percent returns and AT&T’s 11 percent loss during the same period.
In its Q3 2023 investor letter, the Weitz Conservative Allocation Fund provided insights and commentary on Charter Communications, Inc. (NASDAQ: CHTR).
“We swapped the Fund’s Liberty Broadband Corporation (NASDAQ:LBRDK) shares back to Charter Communications, Inc. (NASDAQ:CHTR) (Charter is by far Liberty Broadband’s largest asset), and the combined position was the most notable quarterly contributor. Investor sentiment around broadband’s competitive position became less negative, and the stocks rebounded nicely from what we considered oversold levels. “
1. T MOBILE US INC
Number of HFs: 79
T Mobile is the most popular telecom stock for investment among the 910 hedge funds tracked by Insider Monkey. T Mobile shares returned nearly 7 percent YTD as compared to Verizon’s 5 percent loss and AT&T’s 11 percent loss during the same period. More recently, Clearbridge Investments said the following:
“During the quarter we initiated positions in two new names: T-Mobile US, Inc. (NASDAQ:TMUS) and Gilead Sciences. T-Mobile is the best-in-class player in the wireless space, delivering the strongest growth with the lowest cost structure and the best consumer proposition. T-Mobile’s strength is rooted in its advantaged competitive position. Its superior spectrum holdings enable it to provide better wireless service at meaningfully lower cost. T-Mobile’s annual capital expenditures run about $10 billion, on the order of half the amount its peers must spend. Due to its lower cost structure, T-Mobile can undercut its competitors on price while still generating compelling profitability and returns.
This combination — superior service at lower prices — has enabled T-Mobile to outgrow its competition. In the three years since completing its merger with Sprint, T-Mobile has grown its post-paid subscriber base by about 22%. Over the same period, AT&T’s has grown by about 14%, while Verizon’s by less than 5%.
Given the high fixed-cost nature of the wireless business, these steady increases in revenue growth have led to outsize increases in profits and free cash flow. Free cash flow in 2023 is expected to come in around $13.5 billion, up from less than $8 billion last year. In 2024 free cash flow is expected to grow by over 20% to approximately $17 billion — providing a 10% yield based on today’s stock price.
We have long admired T-Mobile, but until recently the stock did not pay a dividend. The company announced its inaugural dividend in September, and we bought the stock shortly thereafter. The initial yield is about 2% and it is expected to grow about 10% per year.”
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