5G technology: how it works
4G vs 5G: how they compare
5G use cases: examples of 5G
5G Dangers: the fact and fiction
5G Internet: will it replace fibre
5G security: the full picture
5G speed: guide and tools
5G deals: get the best offers
5G phones: discover the best
5G networks: in the US and UK
Despite a turbulent six months for investors, and for the 5G stocks as a whole, we are starting to see 5G stocks bounce back from the effects of coronavirus. Also, the fact that the UK has now clarified its position on Huawei, a non-trading private company, investors can approach the next six months with more certainty.
The stock market saw big dips at the end of March 2020, and 5G stocks were amongst those affected. However, since then, the market has started its recovery, and the picture for 5G still looks attractive to investors. And October has seen 5G stocks continuing to increase in value, which will be further buoyed by the launch of the 5G iPhone this month.
The Covid-19 outbreak, and the need for many people to work remotely, and access the internet on the move, has highlighted the importance of 5G technology. And rather than sideline plans for 5G investment, some reports show that the pandemic has moved 5G up the priority list of many enterprises, and consumer use is also increasing.
However, over the last few weeks, we've seen 5G stocks, especially those in the US, fluctuate more than usual, with the 2020 United States presidential election taking place on November 3rd.
Investors shouldn't panic, though, and – as we predicted in last week's round-up – the conclusion of the presidential campaign in the US has seen stocks rally by 10-20 points on the NASDAQ, NYSE, and other exchanges. Volatility is never received well by the markets, and the announcement that Joe Biden will replace Donald Trump as the 46th president of the United States.
5G stocks prices are on the up
The launch of 5G will affect a huge number of companies, from mobile networks, to healthcare and gaming. This will consequently boost the stock market, as 5G brings new opportunities and revenue streams for companies. 5G stock prices are likely to soar, and investors will be reaping the benefits as 5G continues to grow.
In this weekly update we bring you updates on the hottest 5G stocks.
Current price: $129.19
Market cap: $160.35bn
Year high: $132.33
Year low: $63.50
P/E ratio: 42.25
Dividend yield: -
Hot 5G stock: T-Mobile
T-Mobile US (NASDAQ:TMUS) completed its merger with Sprint in April, creating what the company heralded as a "supercharged Un-carrier that will deliver a transformative 5G network". And marketing speak aside, this wasn’t far off the mark.
At the merger announcement the company said that it expects 14 times more total capacity over the next six years than T-Mobile has today, with T-Mobile also announcing that all new subscribers to T-Mobile would get free access to 5G.
T-Mobile has performed consistently well over the last five years, which has seen the stock price grow from $40 to $115 over that period. And even after the T-Mobile merger with Sprint had been completed, T-Mobile had a debt of $72.5 billion, which, although significant, is far less than the $169 billion and $113 billion that AT&T and Verizon owe, respectively.
Week-on-week we saw T-Mobile recover from a market-wide dip in the heat of the US election, and T-Mobile shares recovered by 12 cents, bringing it close to its 12-month high. And in the week up to November 20th, we've also seen a five point increase.
The parent of the combined company is T-Mobile US, Inc., whose shares of common stock have continued to trade on the NASDAQ Global Select Market under the symbol “TMUS”.
Current price: $139.36
Market cap: $23.15bn
Year high: $158.61
Year low: $67.90
P/E ratio: 29.05
Dividend yield: 1.44%
Hot 5G stock: Skyworks Solutions
Skyworks Solutions (NASDAQ: SWKS) stock is up 13% since the start of the year, and the semiconductor company generated 51% of its total revenue from Apple last year. This is both good and bad news as the 5G iPhone release is expected to face delays in the wake of coronavirus, which saw a recent 5% dip, but an almost immediate recovery. And it's share price has has gone up from $134 to $153 in mid-October. Whilst November saw a certain amount of volatility in price.
Gartner had originally estimated that 221 million 5G smartphones could be sold in 2020 and the Covid-19 outbreak has had an obvious knock-on effect.
However, with Skyworks being one of the main chipmakers for huge players such as Apple, and with the US trade ban on Chinese technology spreading around the globe, it isn’t an investment to be overlooked. And despite Skyworks being on the radar of many investors over the last few months, it still looks like a good choice for those looking for 5G stocks.
Exchange: STO: ERIC-B
Current price: SEK 104.65
Market cap: SEK 350.40bn
Year high: SEK 110.15
Year low: SEK 59.54
P/E ratio: 24.14
Dividend yield: 1.43%
Hot 5G stock: Ericsson
Ericsson (STO: ERIC-B) stock jumped 10% on the 17th July, as the company - buoyed by the news that Huawei 5G kit must be removed from the UK from 2027 - announced its second quarter figures, which include a 4% increase in network sales, despite the significant effects of the coronavirus pandemic.
Strategic contracts, especially those in China, were flagged up by Ericsson as a cause for confidence, and it will no doubt be looking to expand on key partnerships, such as winning an 11.5% stake in a recent $52bn China Mobile tender (the only European company to do so).
Elsewhere, strong investments in R&D have resulted in the company’s patent licensing business continuing to perform well, due to its impressive IPR portfolio, much of which has taken place in the 5G market with “proven performance and cost of ownership benefits".
“We have continued to increase our market share in several markets by leveraging our competitive product portfolio,” Ericsson's Q2 report says. “Profitability in earlier awarded strategic contracts has improved according to plan. We consider strategic contracts to be a natural part of the business and we will stop our forward looking commentary unless there is an extraordinary impact.”
To top off a good period for the company, it also announced recently that it would be working in Oman to help deliver 5G, as part of a multi-year partnership. And this resulted in the company's share price rising from 87.64 SEK to 96.86 SEK in just 24 hours. And since mid-October, we've seen a steady climb in price.
Current price: €3.28
Market cap: €18.56bn
Year high: €4.35
Year low: €2.08
P/E ratio: 25.14
Dividend yield: 3.05%
Hot 5G stock: Nokia
In October 2019 Nokia (HEL: NOKIA) dropped its 2019/2020 outlook as profits came under pressure due to the company spending more on its 5G networks.
Whilst Nokia did meet third-quarter expectations, it still decided to cut profit predictions. On top of this, the company paused dividend payments in order to raise investments for 5G. The extra investments that 5G demands put pressure on the company's finances, and as a result Nokia shares plummeted by 21%.
However, there are definitely green shoots of a recovery coming through, and Nokia has been vocal about its support for open O-RAN technologies, which will be music to the ears of potential partners that may be looking to move away from Huawei.
Nokia has also announced its next-generation 5G AirScale Cloud RAN solution based on vRAN2.0, which will be commercially available in 2020. And earlier this year it announced a €400m 5G deal with Taiwan Mobile. This news saw a steady rise in the share price of around €0.15.
However, the latest financial results from Nokia show a €193m ($227m) net profit for the three months up to September, which is an €82m increase over the same period in 2019. But a fall in sales of 7% had an instant reaction on the stock-market, where the share price dropped from €3.45 at the close of play on the 28th October, to a low of €2.84 – an 18% drop. However, over the following week it recovered to €3.15. And rising to €3.28 up to November 20th.
This makes Nokia one of the most inconsistent 5G stock of those that we feature, but it does have a decent dividend yield, and the longer term outlook should improve.
Current price: $42.53
Market cap: $6.56bn
Year high: $61.52
Year low: $30.58
P/E ratio: 17.62
Dividend yield: -
Hot 5G stock: Ciena
Ciena Corporation (NYSE: CIEN) is a US-based fiber networking specialist, which also produces a number of software-based products that enable network operators to manage xHaul (existing backhaul and fronthaul networks) within 5G networks and beyond.
Ciena specializes in the installation and management of fiber optic networks, which are an essential part of the 5G networking infrastructure, and although other technologies can be used for IP transport, fiber is still the preferred choice.
During the company's fiscal 2020 second quarter, revenue increased by a conservative 3.4%, but adjusted earnings per share rocketed up by 58%, which is a reliable indicator that investors see a positive future for Ciena’s fiber solutions such as its Adaptive IP product. Although, due to the coronavirus pandemic, shares took a hit earlier this year, despite still being up year-on-year. For those that already own Ciena stock, now is not the time to sell. But it may be good point for investors to consider them, as historically Ciena posts annual growth.
And whilst Ciena doesn’t have the heady market cap of many companies operating in and around the 5G market, it is a traditionally strong performer, with year-on-year growth over the last five years.
In the week commencing 2nd November, Ciena's stock was valued at $39.15, but following the market rally after the US election, it returned to $42.87, and should hopefully continue to climb.
As more networks make the move to 5G standalone, and upgrade networking infrastructure accordingly, Ciena will be well placed to handle installation, configuration, and management of fiber optic backhaul within 5G networks.
Current price: $147.53
Market cap: $166.86bn
Year high: $153.33
Year low: $58.00
P/E ratio: 32.61
Dividend yield: 1.76%
Hot 5G stock: Qualcomm
Qualcomm (NASDAQ:QCOM) is one of the most prominent tech stocks in the field of 5G, and following a market-wide slump in the wake of coronavirus, Qualcomm's share price has recovered incredibly well.
Like all 5G stocks, it took a hit at the beginning of November, but rallied by 20 cents in the following week, ringing it up from $123.97 to $142.61 in just seven days. And in the week up to November 20th, it increased again to $147.53.
According to Yahoo! Finance: "One of the stand out quality metrics for Qualcomm Inc is its 5-year Return on Capital Employed, which is a solid 13.0%. Good, double-digit ROCEs are a pointer to companies that can grow very profitably."
And Qualcomm has also seen its stock on the rise following the recent announcement that Qualcomm was launching its new Robotics RB5 platform, which integrates key capabilities such as high-performance heterogeneous computing, 5G/LTE, hi-fidelity sensor processing for perception, odometry for localization, mapping, navigation, strong security, and Wi-Fi connectivity.
The news instigated a six dollar jump in Qualcomm's share price, as the momentum around 5G use cases within the industrial sectors. (The Qualcomm Robotics RB5 platform is designed for the next generation of high compute, low-power robots and drones for the consumer, enterprise, defense, industrial and professional service sectors.)
Current price: $28.74
Market cap: $155.86m
Year high: $30.49
Year low: $7.10
P/E ratio: 26.20
Dividend yield: -
Hot 5G stock: Aviat
Aviat Networks (NASDAQ: AVNW) recently announced that it is working with Safaricom, the largest telecom company in Kenya, to deliver a backhaul connection in remote areas using microwave technology.
Given what we've already reported, regarding the slump during the conclusion of the US election, it should come as no surprise that Aviat Networks has recovered from $18.75 to $28.74 in the last two weeks.
Rolling out 5G in more remote locations poses a number of challenges for mobile network operators (MNOs) around the world, one of the biggest being establishing a backhaul connection when there isn’t the option to run fiber or copper cable to a cell site.
In these cases, MNOs are turning to microwave frequency bands, which, although having extremely poor general coverage, are perfect for focusing a narrower beam, which creates a point-to-point connection between sites, and can deliver speeds of up to 10Gbps, over a distance of six miles
And Aviat says that its multi-band products, such as the The WTM 4800, provide the lowest TCO for 5G backhaul, especially in countries, like Kenya, where the cost of microwave spectrum is high.
Aviat Networks has net cash of $25m. This is fairly high, at 32% of its market capitalization, with a P/E ratio of 26.20, which indicates higher investor expectations for the company.
Current price: $44.18
Market cap: $29.61bn
Year high: £$45.82
Year low: $16.45
P/E ratio: 22.18
Dividend yield: 0.54%
Hot 5G stock: Marvell Technology
Marvell Technology Group (NASDAQ: MRVL) received a downgrade at the start of the year, but this didn't cause panic amongst investors, who saw the stock rally, from $21 at the end of February, to over $43 in mid-October.
And Marvell, which made nearly $3 billion in revenue last year, has been busy in 2020, making partnerships with companies such as Nokia, which it will supply with a new range of system-on-a-chip and infrastructure processors.
The chipsets that come out of this partnership will go into several parts of Nokia's Airscale-branded radio access technology. And Nokia is hoping that this collaboration will lead to a reduction in unit size and power consumption, as well as improvements in capacity and overall performance.
Marvell's chipsets will eventually replace the field programmable gate arrays (FPGAs) that Nokia originally chose for its 5G products. These were an expensive option that doesn’t appear to have paid off.
However, the fact that Marvell stock has grown so significantly in recent months may have moved it beyond the interest of many investors, with some claiming that it may be over-valued, but right now its stock shows no signs of flagging, and it could make a good buy for those looking for a longer-term investment.
Current price: $238.43
Market cap: $105.91bn
Year high: $272.20
Year low: $174.32
P/E ratio: 56.32
Dividend yield: 1.91%
Hot 5G stock: American Tower Corporation
American Tower Corporation (NYSE: AMT) is an owner and operator of wireless infrastructure. This company has an impressive $108.23bn market cap and a huge global footprint. AMT owns over 170,000 telecom infrastructure sites, and so is perfectly placed to benefit from 5G.
At the beginning of the year AMT stock rose by nearly 2% after it was upgraded to ‘Buy’ by Goldman Sachs, as they see rapid growth from expanding 5G coverage.
However, the stock has seen more conservative increases as the company was hit by the effects of the coronavirus pandemic, and the slowing roll out of 5G around the world.
But, like other communications infrastructure companies, the next few months should see a return to previous levels of growth, and the company has still seen a $0.20 increase in shares since January. And through October the company saw slow but steady growth.
Add to this the increasingly defensive position of the US government when it comes to technology providers, and the future looks bright for the American Tower Corporation, as demand for 5G infrastructure continues to grow.
Current price: 747.00 TWD
Market cap: 1.19tn TWD
Year high: 763.00 TWD
Year low: 273.00 TWD
P/E ratio: 36.37
Dividend yield: 1.41%
Hot 5G stock: MediaTek
In August 2020, US sanctions on Huawei were extended to MediaTek Inc. (2454:Taiwan), as the US DOC announced that it has added 38 Huawei affiliates to the US government's economic blacklist, taking the total to 152.
This caused a 10% drop in MediaTek’s share price, but this knee-jerk drop, alarming as it was for investors, doesn’t really paint a true picture of MediaTek’s investment potential. In fact, it may have made it even more appealing for investors willing to look at the longer-term.
Like other shares, it took a hit in the US election campaign, dropping to 665.00 TWD, but recovered to 686.00 TWD within a week, reflecting the resilience of this stock. And it now sits at 747.00 TWD.
MediaTek recently announced its 7nm Dimensity 800U chipset, which has an impressive list of features, supporting sub-6Ghz SA and NSA networks, whilst also supporting technologies such as 5G+5G dual SIM dual standby (DSDS), dual Voice over New Radio (VoNR), and 5G two carrier aggregation (2CC 5G-CA).
And with MediaTek chips already used in phones from manufacturers such as OPPO, Samsung, Vivo, and Xiaomi, the tighter restrictions on MediaTek might not be as damaging as some investors fear. And in the last two months alone, its stock has increased by almost 150 TWD.