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5 Telecom Stocks Expected to Beat the Market in 2H & Beyond

Sandip Chakraborty

During the first half of 2019, 5G wireless technologies virtually dominated the rational business model of telecom operators across geographies. So far, 2019 has presented several novel opportunities for technology companies to enhance their revenue sources. Most of these prospects have stemmed from changing market conditions and evolving consumer preferences.

In order to achieve significant traction, telecom carriers are rapidly deploying the latest 4G LTE Advanced technologies to deliver faster peak data speeds and capacity for customers. At the same time, they are expanding fiber optics networks to support growth in 4G LTE and 5G wireless standards.

With growth in video and bandwidth-intensive applications, communications service providers are increasing investments in LTE, broadband and fiber to provide additional capacity and to ramp up Internet and wireless network infrastructure.

5G to Revolutionize the Industry

The 5G boom is likely to propel the industry to greater heights through 2019 and beyond. However, the success of this technology hinges on substantial investments to upgrade infrastructure in the core fiber backhaul network to support growth in data services.

With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, the industry is developing solutions to support wireline and wireless network convergence. This is essential for the success of 5G. Markedly, 5G wireless has plenty of room to broaden the addressable market for wireless carriers and embed them further into varied digital ecosystems.

A few leading operators have already launched next-generation 5G wireless residential broadband services in multiple U.S. markets this year, while a full phased 5G wireless network is expected to go live in 2020. Overall, the rewarding industry appears poised to benefit from healthy growth dynamics, favorable drivers and inherent sector strength.

The Winning Formula

Against this backdrop, it will be profitable for investors to bet on stocks in this space. Here, with the help of the Zacks Stock Screener, we’ve handpicked five telecom stocks that either carry a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). With solid fundamentals, these stocks portray immense upside potential and are likely to beat the market in the future. You can see the complete list of today’s Zacks #1 Rank stocks here.

Further, these stocks have handily outperformed the S&P 500 composite on a year-to-date basis and are expected to continue their winning run in the near future.

YTD Price Movement



Our Recommendation

Ubiquiti Networks, Inc. UBNT: Shares of this New York-based networking technology developer, currently flaunting a Zacks Rank #1, have rallied 31.8% year to date. The Zacks Consensus Estimate for the current-year earnings has been revised 4.7% upward over the past 60 days. The company has long-term earnings growth expectation of 19.8%. Ubiquiti surpassed earnings estimate in each of the trailing four quarters, the average positive surprise being 22.3%.

Motorola Solutions, Inc. MSI: The consensus estimate for this Chicago, IL-based mission-critical communication solutions provider’s earnings has moved up 0.9% for the current fiscal year over the past 60 days. The stock, carrying a Zacks Rank #2, has returned 45.1% year to date. The company has long-term earnings growth expectation of 7.7%. Motorola surpassed earnings estimate in each of the trailing four quarters, the average positive surprise being 22.3%.

Qualcomm Incorporated QCOM: Shares of this San Diego, CA-based digital communication products manufacturer, with a Zacks Rank #3, have rallied 36.2% year to date. The company has long-term earnings growth expectation of 13.7%. Qualcomm surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 17.6%.

Arista Networks, Inc. ANET: The consensus estimate for this Santa Clara, CA-based cloud networking solutions vendor’s earnings has moved up 0.8% for the current fiscal year over the past 60 days. The stock, with a Zacks Rank #3, has returned 24.7% year to date. The company has long-term earnings growth expectation of 18.8%. Arista surpassed earnings estimate in each of the trailing four quarters, the average positive surprise being 12%.

Acacia Communications, Inc. ACIA: Shares of this Maynard, MA-based high-speed coherent optical interconnect products manufacturer, with a Zacks Rank #3, have rallied 32.7% year to date. The Zacks Consensus Estimate for the current-year earnings has been revised 7.1% upward over the past 60 days. The company has long-term earnings growth expectation of 18.5%. Acacia surpassed earnings estimate thrice in the trailing four quarters, the average positive surprise being 42.1%.

Road Ahead

Despite operational headwinds and trade tensions remaining latent threats, the telecom industry is well positioned to benefit from solid growth dynamics with the launch of 5G technologies, increased market traction of fiber optics and massive proliferation of data traffic. At the same time, the industry remains focused on leveraging wireline momentum, expanding media coverage, improving customer service and achieving a competitive cost structure to generate higher average revenue per user and attract new customers.

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