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5G Stocks: Weekly Watchlist – July 2019

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Fifth-generation wireless technology, AKA 5G, could be one of the most revolutionary technologies of our time. The four major wireless carriers have already begun rolling 5G out across the country, but which companies are set to benefit from the continued growth of the industry.

There are still many bugs that need to be worked out, but it appears the 5G revolution is just around the corner. 5G is so important to the future of the U.S. that White House blacklisted Chinese tech giant Huawei due to ‘national security’ concerns relating to the use of its technology in 5G infrastructure.

Which 5G Companies Are The Best Bets?

When you hear 5G, wireless providers are probably the first companies you think of. However, that’s not the best way to play this trend. Building a 5G network costs tons of money and could take years to pay off.

The real winners might be the smaller companies that provide services and lease infrastructure to the large wireless providers. Here are our picks for the best opportunities in the space.

Ericsson (ERIC)

Ericsson is a huge player in the global 5G industry. This Swedish company is helping telecom companies upgrade their networks to 5G, and Ericsson also sells wireless software and radio network hardware. Ericsson recently inked a licensing agreement with Chinese smartphone producer Oppo, deals like this could help fuel additional growth. The company is expected to continue to capture market share in the U.S. as it continues to fill the void left by the Huawei blacklist.

Xilinx (XLNX)

Xilinx chips are common in the 5G industry. The chipmaker is known best for its field-programmable gate arrays (FPGAs). Users can easily configure/reconfigure these popular chips, so they’re great for debugging the new network. The early phases of the 5G rollout will likely have tons of bugs and problems, and FPGAs allow field technicians to test and tweak the network with ease.

American Tower Company (AMT)

AMT is a REIT that owns, operates, and leases wireless and broadcast communication infrastructure both domestically and abroad. The company owns over 170,000 towers in 16 countries. Shares of AMT are up 45% over the past year and pays a $3.45 annual dividend.

VMWare (VMW)

5G infrastructure also needs software. VMWare offers unique software that enables carriers to run multiple networks on the same hardware. The company has agreements in place with AT&T (T), Vodafone (VOD), and Ericsson. VMWare also has a successful cloud business that is expected to continue to grow.

Nokia (NOK)

If you’re old enough to remember the early days of wireless calling, you can likely recall the Finland-based Nokia for their cheap handsets. These days, Nokia doesn’t get much of its revenue from cell phones. Instead, it’s made an aggressive shift towards 5G and, so far, it’s paying off. Nokia sells various telecom equipment to wireless service providers, including 5G hardware. The company currently has 42 commercial 5G contracts and they are competing with Ericsson to capture more market share. The stock is having a  rough 2019, but a recent rally elevated prices to be down only 1% YTD. It could be the beginning of a breakout.

More on 5G Stocks

This 5G watchlist is only a basic overview. For more detailed information on 5G stocks and the entire telecom sector, be sure to check out our investors guide to the best telecom stocks.

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