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In this article we will take a look at the 10 best 5G stocks to buy now. You can skip our detailed analysis of the 5G industry and go directly to 5 Best 5G Stocks to Buy Now.
The 5G revolution is set to bring about consequential changes in key markets including telecom, gaming, data center, software production, smartphones and apps. Major telecom, software and hardware companies are already racing to profit from the migration of billions of users from 4G to 5G networks across the globe. Samsung last year launched two 5G-enabled smartphones. Similarly, in March 2020, HMD Global announced Nokia 8.3 5G in the market. Powering these 5G smartphones are chips by giants like Qualcomm, Huawei, Marvell and Skyworks. The governments in the developed world are expanding the 5G infrastructure rapidly and doling out billions in contracts to 5G infrastructure, semiconductor and telecom companies.
Growth Catalysts for 5G Stocks
5G stocks present a strong investment opportunity for long-term investors as the connectivity revolution is just getting started. A report by McKinsey predicts that just 25% of the world’s population will be able to use 5G by 2030, mostly in wealthy parts of the world like the U.S., Europe and mainland China. As new companies enter the market, 5G stocks will gain traction. 5G isn’t just about having higher internet speeds. Once billions of users are able to break through the limited internet speeds, their demand for content, gaming, videos, apps and software will rise exponentially. This would buoy various markets and lift stocks mostly in the sectors directly affected by the connectivity boost. McKinsey’s report says that the consequential communication revolution after 5G is expected to add $1.5 trillion to $2 trillion to global GDP.
5G will also fuel growth in AI, Internet of Things and smart home technology. Jake Moskowitz from Ericsson Emodo, said in an interview that 5G will make it possible for sensors to operate better, increasing data aggregation and improvement. This would improve the quality of AI and smart home devices.
While choosing stocks to invest in, you should perform detailed research amid the increasing volatility in the financial markets, which is making it harder for even the smart money to sustain profits. The hedge fund industry that once used to post sterling gains is also feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context and industry outlook in mind, let’s start our list of 10 best 5G stocks to buy now.
Best 5G Stocks to Buy Now
10. Nokia Corporation (NYSE: NOK)
Number of Hedge Fund Holders: 19
Nokia ranks 10th on the list of 10 best 5G stocks to buy now. The Finland-based company is cutting reliance on FPGAs as 40% of its products now use ASICs designed in-house. The company plans to tap into the Chinese market for 5G radio projects. In January, Nokia won a new 5G contract from T-Mobile. In the fourth quarter, Nokia’s 5G gross margins jumped amid reduced costs and higher volumes and shipments of ReefShark Nokia’s 5G chipset.
The company is also getting the attention of the smart money, as 19 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, compared to 21 funds a quarter earlier.
9. Telefonaktiebolaget LM Ericsson (publ) (NASDAQ: ERIC)
Number of Hedge Fund Holders: 20
Swedish giant Ericsson ranks 9th in our list of 10 best 5G stocks to buy now. The company was recently chosen by Belgium’s Telenet Group for its 5G wireless network. The company posted upbeat results in the fourth quarter on the back of increasing margins and new 5G contracts. Revenue in the quarter jumped 13%, while gross margin improved by nearly four percentage points.
As of the end of the fourth quarter of 2020, Arrowstreet Capital owns 4.7 million shares of Ericsson worth $55.9 million. ERIC accounts for 0.07% of Arrowstreet's total portfolio.
8. Marvell Technology Group Ltd. (NASDAQ: MRVL)
Number of Hedge Fund Holders: 40
Bermuda-based Marvel is an excellent stock to ride the 5G wave, as the company offers various products in the industry. The company recently partnered with Samsung to develop a new System-on-Chip (SoC) which will be integrated into Samsung’s Massive MIMO and advanced radios. In October 2020, KeyBanc analyst John Vinh gave an Overweight rating to Marvell with a $55 price target. The analyst said that Marvell is one of the “best-positioned companies” to take advantage of the inflection in 5G infrastructure market.
A total of 40 hedge funds tracked by Insider Monkey were bullish MRVL at the end of the fourth quarter, up from 37 funds a quarter earlier.
"Marvell reported a strong beat to expectations for the first quarter and raised both revenue and margin guidance for the year. The company is performing exceedingly well in our view. While the company’s storage business still has some headwinds, strong demand in networking and cloud computing has helped tremendously.”
7. Skyworks Solutions, Inc. (NASDAQ: SWKS)
Number of Hedge Fund Holders: 41
California-based semiconductor company Skyworks Solutions ranks 7th in the list of 10 best 5G stocks to buy now. In September 2020, Ascent Wealth Partners’ Todd Gordon said that Skyworks is an excellent 5G stock because the company is diversifying into Internet of Things and smart home. The company launched its 5G platform called Sky5 in 2019. The company recently beat first-quarter estimates and said that its board approved a $2 billion share buyback plan. The company also issued a strong revenue guidance.
As of the end of the fourth quarter, there were 41 hedge funds in Insider Monkey’s database that held stakes in Skyworks, compared to 50 funds in the third quarter. AQR Capital Management, with 1.9 million shares of SWKS, is the biggest stakeholder in the company.
Semper Augustus Investments Group, in their Q4 2020 investor letter, said that they’ve liquidated their position in Skyworks Solutions, Inc. (NASDAQ: SWKS) to look for better opportunities. Here is what Semper Augustus Investments Group has to say about Skyworks Solutions, Inc. in their Q4 2020 investor letter:
"Analog semiconductor manufacturer Skyworks was also completely liquidated. The stock had reached our appraisal of fair value early in the year and then fell by half, back to our cost basis in March. Worried about the duration of loss of demand in consumer electronics and having better opportunities, we sold the Skyworks position, wanting the cash for deployment elsewhere. Skyworks was sold at approximately our original cost basis, all of the prior gain evaporated. The Skyworks sale was boneheaded, as the shares not only doubled back to their highs but continued higher from there. That the proceeds were invested well doesn’t remedy that the sale was of too good of a company at way too low a price. Opportunity cost in this case was opportunity lost.”
6. Qorvo, Inc. (NASDAQ: QRVO)
Number of Hedge Fund Holders: 51
Qorvo is a semiconductor company that is set to benefit from the 5G market as it enables 5G infrastructure in the U.S. and global markets. The North Carolina-based company offers a broad range of RF connectivity solutions and chips. Last month, Barclays upgraded Qorvo stock, citing expected radio frequency market growth of over 20% in 2021. The firm also increased its price target for the stock to $190 from $185.
Seth Klarman's Baupost Group is one of the 51 hedge funds tracked by Insider Monkey having stakes in QRVO at the end of the fourth quarter. The fund owns over 4.4 million shares of the company.
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Disclosure: None. 10 Best 5G Stocks to Buy Now is originally published on Insider Monkey.