12 Best Telecom Stocks To Buy Right Now
In this piece, we will take a look at the 12 best telecommunications stocks to buy right now. If you want to skip our overview of the telecommunications industry, then take a look at 5 Best Telecom Stocks To Buy Right Now.
The telecommunications industry is one of the most important in the world right now, and before the advent of the internet era, it was responsible for ushering in the wave of globalization. Before the telephone was invented, long distance communication could only be carried out through the telegraph, and this limited communications as the telegraph could only send messages in text form that were coded and then decoded.
With the spread of the internet, the telecommunications industry has also seen significant changes, in an interesting development as the early days of internet connectivity saw users rely on their telephone to go online in the 1990s and the early 2000s. Since then, traditional telecommunications mediums, such as the telephone and cellular connectivity have faced stiff competition as high speed internet courtesy of 4G, LTE, and now 5G has enabled users to rely on voice over internet protocol (VOIP) to make phone calls and send messages. VOIP services such as Meta Platforms, Inc. (NASDAQ:META)'s WhatsApp have allowed users to avoid paying for phone packages, and instead rely on internet coverage to communicate with each other.
Additionally, cell phone coverage provides users in most regions of the world with the ability to contact others thousands of miles away; a convenience that was unavailable to the mass market before the turn of the millennium. Satellite connectivity is a key drive of long distance telecommunications, and newer satellites even seek to help users who might be unable to gain a connection through a cell phone tower.
While traditionally telecommunications satellites were located at much higher altitudes to expand their coverage map at the expense of coverage loss at higher altitudes, an opening of low Earth orbit (LEO) courtesy of existing and planned rocket systems is also ushering in changes to connectivity. Most telecommunications satellites before the recent developments circled the Earth around the equator, which limited their ability to end signals down to individual devices and towers at higher latitudes such as regions in the Arctic. Additionally, the higher altitude (geostationary satellites orbit at altitudes in excess of 30,000 kilometers) also left traditional satellite phones prone to latency, even when used inside airplanes.
These limitations are also present in internet networks that rely on the heftier geostationary satellites, with internet coverage being one area where LEO satellites have shown their disruptive potential to the telecommunications sector. Internet coverage has typically been the domain of carriers, particularly during the early days of dial up coverage. Then, as fiber networks and associated infrastructure required heftier investments and even today, firms such as Lumen Technologies, Inc. (NYSE:LUMN) (previously CenturyLink) offer both fixed line voice and internet services to users.
LEO satellites are now filling the gap left by fixed wireless broadband in regions where large firms are hesitant to commit significant financial resources due to inadequate returns. Regions in the U.S., the polar areas, Canada, Australia, and other countries often have users living far away from cities and missing out on internet coverage as a result. At the same time, poor customer support often leaves many people seeking alternatives and choosing to settle down with satellite internet even if it's slower than broadband simply to avoid the hassle of dealing with complex billing procedures and charges.
Along with Lumen Technologies, other fixed internet and telecommunications firms include Spectrum Brands Holdings, Inc. (NASDAQ:SPB), Verizon Communications Inc. (NYSE:VZ), Cox Enterprises, Inc., and Comcast Corporation (NASDAQ:CMCSA)'s Xfinity. As the telecommunications industry matures, internet and telephony service providers are also starting to shift their infrastructure to fiber. For example, AT&T Inc. (NYSE:T) does not offer new DSL connections as it encourages even existing DSL customers to shift to fiber networks instead.
Finally, with space access becoming cheaper and easier courtesy of SpaceX's Falcon 9 rocket, the Starlink satellite internet constellation has rapidly grown to become one of the largest internet networks in the world. SpaceX has launched thousands of small Starlink internet satellites to date, and even Amazon.com, Inc. (NASDAQ:AMZN) is entering this industry through its Kuiper satellites. Kuiper, an Amazon subsidiary, has earmarked $10 billion in investments for satellite fabrication, launch, user terminals, and ground system operations as part of a functioning internet network that promises to offer internet speeds ranging from 100 Mbps to 1 Gbps depending on the consumer terminal and coverage option.
With this backdrop, as traditional land coverage providers shift their networks to fiber and new entrants offer wider coverage, we made a list of telecommunications stocks that smart money is piling into. Within this list, some top hedge fund telecommunications stock picks are Charter Communications, Inc. (NASDAQ:CHTR), T-Mobile US, Inc. (NASDAQ:TMUS), and Comcast Corporation (NASDAQ:CMCSA).
A technician installing advanced cellular equipment at a 5G cell tower. Editorial photo for a financial news article. 8k. --ar 16:9
Our Methodology
To compile our list of the best telecommunications stocks to buy, we first compiled the 40 large telecommunications services providers whose business models rely on on wired and wireless phone and internet coverage. Then, those firms with the highest number of hedge fund investors as of the second quarter of 2023 were selected and the top 12 telecommunications stocks to buy are as follows.
12 Best Telecom Stocks To Buy Right Now
12. Liberty Latin America Ltd. (NASDAQ:LILAK)
Number of Hedge Fund Investors In Q2 2023: 25
Liberty Latin America Ltd. (NASDAQ:LILAK) is a global telecommunications company with operations in Latin American and Caribbean countries. A weak macroeconomic environment coupled with business restructuring has made an impact on its income statement, as revenue for the first half of this year dropped annually.
Insider Monkey scoured through 910 hedge funds for their second quarter of 2023 shareholdings to find that 25 had invested in the company. Liberty Latin America Ltd. (NASDAQ:LILAK)'s biggest hedge fund investor is William Crowley, William Harker, and Stephen Blass's Ashe Capital as it owns 10 million shares that are worth $91.6 million.
Along with T-Mobile US, Inc. (NASDAQ:TMUS), Charter Communications, Inc. (NASDAQ:CHTR), and Comcast Corporation (NASDAQ:CMCSA), Liberty Latin America Ltd. (NASDAQ:LILAK) is a top telecom stock to buy.
11. Altice USA, Inc. (NYSE:ATUS)
Number of Hedge Fund Investors In Q2 2023: 26
Altice USA, Inc. (NYSE:ATUS) is a diversified communications and internet firm that offers telecommunications products such as VOIP coverage and mobile services. The firm has had an eventful 2023 so far, as not only do reports suggest that it is looking to sell a television channel, but its chairman also resigned after a co founder was arrested in Portugal on corruption charges. Additionally, the firm's $60 billion of debt as of August 2023 continues to raise alarm bells for management, investors, and creditors.
During Q2 2023, 26 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Altice USA, Inc. (NYSE:ATUS). Out of these, the firm's largest shareholder is Cliff Asness' AQR Capital Management since it owns 17.1 million shares that are worth $50.3 million.
10. Cable One, Inc. (NYSE:CABO)
Number of Hedge Fund Investors In Q2 2023: 27
Cable One, Inc. (NYSE:CABO) is a mid sized video, data, and voice connectivity products and services provider. Amidst a tough environment for the telecommunications industry which has seen operators struggle with high inflation and unwilling consumers when it comes to high prices, the firm has missed analyst EPS estimates in all four of its latest quarters. However, analysts have set a $848 average price target for Cable One, Inc. (NYSE:CABO), for a sizeable upside over the current share price.
As of June 2023, 27 hedge funds among the 910 tracked by Insider Monkey were the firm's investors. Cable One, Inc. (NYSE:CABO)'s largest shareholder in our database is Tom Russo's Gardner Russo & Gardner courtesy of a $56.7 million investment.
9. Liberty Global plc (NASDAQ:LBTYA)
Number of Hedge Fund Investors In Q2 2023: 29
Liberty Global plc (NASDAQ:LBTYA) provides fixed line, internet, and other telecommunication services. The firm has had a busy October, as it took a full stake in a Belgian television provider. Liberty Global plc (NASDAQ:LBTYA) had previously owned a majority stake in the firm, and its shares are rated Buy on average.
By the end of this year's second quarter, 29 out of the 910 hedge funds part of Insider Monkey's database were Liberty Global plc (NASDAQ:LBTYA)'s investors. Out of these, the firm's largest investor is Seth Klarman's Baupost Group due to its $799 million stake.
8. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Investors In Q2 2023: 33
DISH Network Corporation (NASDAQ:DISH) is a satellite television provider that is one of the dominant players in its market. The firm is currently responding to SpaceX Starlink's disruption of the satellite industry by merging with Echostar to expand its wireless portfolio.
After digging through 910 hedge funds for their shareholdings during this year's June quarter, Insider Monkey discovered that 33 had held a stake in DISH Network Corporation (NASDAQ:DISH).
7. Iridium Communications Inc. (NASDAQ:IRDM)
Number of Hedge Fund Investors In Q2 2023: 34
Iridium Communications Inc. (NASDAQ:IRDM) is another satellite company, but unlike DISH, it uses its satellites for pure play communications services such as phone and voice coverage. The firm's recent third quarter earnings saw it report $176 million in revenue for a 7% annual growth, but the firm's delayed plans of introducing satellite connectivity on smartphones have seen its shares drop.
Insider Monkey's second quarter of 2023 survey of 910 hedge fund holdings revealed that 34 had bought and owned a stake in the company. Iridium Communications Inc. (NASDAQ:IRDM)'s biggest hedge fund investor is Kevin Kuebler and Ming Lam's Silver Heights Capital Management as it owns $150 million worth of shares.
6. Frontier Communications Parent, Inc. (NASDAQ:FYBR)
Number of Hedge Fund Investors In Q2 2023: 39
Frontier Communications Parent, Inc. (NASDAQ:FYBR) is one of the oldest telecommunications companies on our list since it was set up in 1935. The shares might be in for some action in the coming months if analyst predictions of a T-Mobile acquiring the company bear fruit.
39 out of the 910 hedge funds part of Insider Monkey's Q2 2023 database had bought and owned Frontier Communications Parent, Inc. (NASDAQ:FYBR)'s shares. Stephen Feinberg's Cerberus Capital Management owns the biggest stake among these which is worth $448 million.
Charter Communications, Inc. (NASDAQ:CHTR), Frontier Communications Parent, Inc. (NASDAQ:FYBR), T-Mobile US, Inc. (NASDAQ:TMUS), and Comcast Corporation (NASDAQ:CMCSA) are some telecom stocks that hedge funds have invested in.
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Disclosure: None. 12 Best Telecom Stocks To Buy Right Now is originally published on Insider Monkey.
