Most Americans who think of 5G providers will tend to think of AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), T-Mobile US Inc (NASDAQ:TMUS), and Sprint Corp (NYSE:S). These providers will provide most of the 5G service to American customers.
However, often interactions with other 5G applications are overlooked by U.S. users. Some may provide the hardware that makes 5G possible. Others serve as providers outside of the United States.
Also, some may provide applications not previously seen in the marketplace. The scope of 5G goes well beyond the scope of a small number of U.S. service providers.
These three-plus companies also provide 5G-related products and services (and possibly outsized stock gains) often forgotten by consumers.
5G Stocks You Didn’t Know About: Apple Inc. (AAPL)
Moving beyond service providers usually leads customers to equipment. As we all know, devices made by Apple Inc. (NASDAQ:AAPL) have transformed communications since the advent of the iPhone in 2007.
Now, as 5G deployments begin, the massive increase in capabilities will usher in demand for new devices that can accommodate the technology. Those who might have skipped upgrades in the past will have to buy a new iPhone. Moreover, PCs could enjoy a new round of upgrades for the same reason. Also, as the technology makes new applications possible, 5G could usher in new product lines for Apple not yet created.
Much of this work has already begun. Apple is rumored to be working with Intel Corporation (NASDAQ:INTC) to provide the needed 5G modems for the iPhone. By working with Intel, they could also sidestep Qualcomm, Inc. (NASDAQ:QCOM), a company that has sparred with Apple in the courtroom recently.
The financials for AAPL stock also look promising. Despite its large size, the company still enjoys double-digit earnings growth in most years. Moreover, AAPL stock trades at a PE of around 18. This is well below S&P 500 averages and seems unusual in an industry that often sees premium valuations.
Furthermore, the company holds more than $260 billion in cash. This stands as the largest corporate cash hoard in the world by far. Innovation can come from anywhere. However, Apple’s cash gives the company the capability to develop or buy any cutting-edge technology it could need.
5G Stocks You Didn’t Know About: China Mobile Ltd. (ADR) (CHL)
Despite being unknown to most American consumers, China Mobile Ltd. (ADR) (NYSE:CHL) stands out amongst the service providers. CHL stands in a strong financial and market position, especially compared to U.S. counterparts. In the U.S., providing service has become a brutal business.
Competition has reduced razor-thin profit margins. Also, as I highlighted in an earlier article about T-Mobile (NASDAQ:TMUS), each of the four major companies face a 5G rollout that will cost each company tens of billions of dollars over the next few years. Higher costs and lower profits leave investors little room to develop the needed returns to grow dividends and stock prices.
However, CHL should also be better-positioned to finance a 5G rollout than any American telco. At just over 478 billion yuan ($78.1 billion), few companies in any industry can rival its cash position. CHL also exists as a state-owned telco provider that commands a 60+% market share.
Although its rivals have gained market share, it still outpaces other state-owned rivals China Unicom and China Telecom Corporation Limited (ADR) (NYSE:CHA) by wide margins. With an estimated 894 million subscribers, the company has become the largest telco in the world.
None of its American peers exercise such dominance. Now, trials have already begun on a 5G network. The company plans a 5G launch by the end of 2019.
Like most telcos, profit growth remains stagnant. Still, CHL stock trades at a price-to-earnings (PE) ratio of about 10.9, lower than any of its counterparts in the U.S. I’m not a fan of the telco sector in general. However, if you have to own a telco stock, a low PE, state protection, and a large cash hoard leave CHL stock in the strongest position.
5G Stocks You Didn’t Know About: Comcast Corporation (CMCSA)
Given the cable-cutting trend, one might think Comcast Corporation (NASDAQ:CMCSA) would be the last company to benefit from 5G. However, the mass media company, and by extension CMCSA stock, could find a new lease on life in the Internet of Things (IoT). One of the first new developments in 5G will be connecting always-on IoT devices to wireless networks.
Comcast recently purchased IControl Networks. This company applies IoT to connected home security devices. However, it takes security one step further. Their technology places sensors throughout a home that can communicate with one another. It also automates devices such as cameras and thermostats that a user can manage from a centralized location. Comcast has also explored options to apply its existing network to 5G backhaul. This is comparable to how it reworked its cable network to provide internet service in the previous decade.
CMCSA stock currently trades at 13 times forward earnings. It has also fallen to near 52-week lows, trading more than 20% below January highs. Also, the dividend, which the company cut in 2017, still produces a yield of around 2%.
Also, signs have emerged that a recovery could be in the works. Dividend increases resumed this year. Shareholders now receive 19 cents per share every quarter, up from 15.75 cents per share. Moreover, analysts expect profit growth to resume after 2018. They expect net income increases to exceed 10% per year in 2019 and 2020.
5G Stocks You Didn’t Know About: Unknown
I realize readers could perceive this pick as a cop out. However, investors should not forget that 5G will usher in applications not yet possible. Perhaps solutions are being developed in the lab of an Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG), Apple, or a Qualcomm.
Or maybe, other ideas are being tested in a garage in Silicon Valley. Other concepts may have yet to escape the mind of an innovative inventor.
The advent of previous generations of wireless made innovations such as cell phones and later, streamed video possible. The rise of 5G will lead to more new concepts.
A few of these ideas will make it to market, leading to outsized gains for prospective investors. Investors should read publications such as InvestorPlace to stay on top of the latest stocks. By staying abreast of new technologies, one can make sure that the next hot 5G stock captures your attention before everyone else buys.
As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.