Upgrades to the next-generation 5G networks will drive demand across a wide range of companies, from semiconductor players, tower infrastructure companies, testing equipment providers, and wireless carriers. While it’s possible that a lot of long-term value from 5G will be captured by companies that build software and services, companies building out the infrastructure and providing components should benefit significantly in the near to medium-term. In our theme 5G Stocks: Companies Poised To Ride The 5G Upgrade Wave, we’ve picked a handful of U.S. based companies – including Qualcomm (NASDAQ: QCOM), Verizon (NYSE: VZ), American Tower Corp (NYSE: AMT), and Skyworks Solutions (NASDAQ: SKWS) that stand to benefit from the 5G upgrade cycle. Our 5G Stocks theme has outperformed the market, rising by about 74% since early 2018 vs. 28% for the S&P 500 and is up 11% YTD compared to 6% for the S&P. We provide a brief summary of the stocks below.
Keysight Technologies provides electronics test and measurement equipment and software targeted at the wireless sector. Keysight should benefit from the 5G rollout, as equipment and chip manufacturers who want to design and develop 5G products would likely require its testing and measuring solutions. While the stock has more than doubled since early 2018, it remains down by about 9% year-to-date.
Qualcomm, one of the largest modem and mobile processor vendors, is seen as a leader in 5G wireless technology. The company could see sales pick up as smartphone behemoth Apple is widely expected to use Qualcomm’s modems in its latest iPhones. The stock has gained about 88% since early 2018 and is up by about 26% this year.
American Tower Corp the largest U.S. based tower leasing company is structured as a real estate investment trust. Tower companies stand to gain from 5G considering that antennas and other equipment for 5G are heavier and larger, meaning that rentals could also be higher. The stock is up 81% since early 2018 and by about 8% this year.
Skyworks Solutions sells analog semiconductors that include power amplifiers, front-end modules, and radio frequency products that go into mobile and wireless devices as well as wireless infrastructure equipment. The company counts Apple as one of its largest customers. The stock has gained over 44% since early 2018 and is up by about 9% this year.
Qorvo, Inc. also supplies RF components to the smartphone players such as Apple, as well as to the infrastructure, and defense space. The stock is up about 79% since early 2018 and is down 2% YTD. (See our analysis Is Skyworks A Better Bet Than Qorvo?)
Verizon , one of the largest U.S. wireless carriers, stands to benefit from 5G related subscriber additions and potentially improved pricing for 5G plans. Moreover, the technology’s high speeds and reliability could allow Verizon to play a bigger role in the home broadband market, taking on the likes of Charter and Comcast. The stock is up 26% since early 2018 and has remained roughly flat this year.
What if you’re looking for a more balanced portfolio instead? Here’s a top-quality portfolio to outperform the market, with over 100% return since 2016, versus 55% for the S&P 500, Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk. It has outperformed the broader market year after year, consistently.
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