There’s no doubt that the market is getting brutalized with regularity these days.
Much of it is the economic implications of the novel coronavirus and how the U.S. economy recovers from the lockdowns, market losses and credit issues. Some of it has to do with the end of a bull market without significant corrections.
That had a lot to do with central banks managing the major economies around the world, which gave business a solid platform of support so companies could grow consistently, if not grandly.
A predictable market is what Wall Street likes, and it had it for a long time.
But things have changed. Yes, the Federal Reserve and other central banks are stepping in with unprecedented measures, but managing a pandemic is hardly predictable.
That why it pays to have solid, reliable stocks in your portfolio that will be there through it all — and certainly after it all shakes out. The seven telecom stocks worth a look here are just those types of stocks.
All that telecommuting and streaming going on now — many of these telecom stocks benefit from that and from massive future growth opportunities in the industry. And all are A or B rated by my Portfolio Grader.
Telecom Stocks to Buy: T-Mobile (TMUS)
T-Mobile (NASDAQ:TMUS) is working hard to become the No. 3 mobile carrier in the U.S. And now that its merger with former rival Sprint (NYSE:S) has received all the necessary approvals, that goal is much closer.
It has taken a long time for this merger to work out. But its $75 billion market capitalization makes it a significant player in the U.S. telecom market now.
Having been the underdog for so long, and being led by the unconventional John Legere — who stepped down as CEO on April 1, a date likely consciously chosen for its irony — it has already proven that corporate titans in telecom have a challenge on their hands.
TMUS stock doesn’t pay a dividend, but the stock is up 25% in the past 12 months. It’s up 11.2% in the past 3 months, which shows this is where a lot of money is moving in the down market.
Cogent Communications (CCOI)
Cogent Communications (NASDAQ:CCOI) is a Tier 1 internet service provider (ISP) that is one of the top 5 networks in the world. Basically, it provides internet access to companies from large to small as well as carriers, service providers and other businesses that need internet access.
It was built on the concept of treating bandwidth like a commodity, so it bills its customers by usage, rather than a set fee structure. And it operates outside of the regional Bell operating companies (RBOCs) — like AT&T (NYSE:T) and Verizon (NYSE:VZ) — so it doesn’t depend on negotiating contracts with rivals for accessing bandwidth.
That also allows it significant flexibility in building out its offerings. And given the fact that much of the world is on lockdown right now, that means all those telecommuting office workers and all those streaming services are filling CCOI’s pockets.
Because it’s a very focused company, it’s not huge — it has a $3.8 billion market cap — but it does have 54 internet data centers around the world, and provides service to more than 205 major markets and more than 6,950 other networks.
The stock is up 51% in the past year and nearly 24% in the past 3 months. And, when it comes to future prospects, the growth story here is much larger than any one stock.
Telecom Stocks to Buy: BCE (BCE)
BCE (NYSE:BCE) is the Canada version of the Bell companies in the U.S. As a matter of fact, it was launched in Canada in 1880 as the Canadian spinoff of the old Ma Bell.
But over the years it has developed its own identity in the Great White North. And it is a dominant player in the Canadian telecom sector. It offers the same broad list of services offered by its U.S. Bell brethren and should see a growth in usage during these Covid-19 times.
But it’s rock solid and has a firm foothold on its business.
While the stock is off 13% in the past 12 months, most of that has happened in the past 3 months. And at this point, it delivers a very attractive 6.3% dividend.
Iridium Communications (IRDM)
Next on my list of telecom stocks is Iridium Communications (NASDAQ:IRDM). It has a product you have likely seen in any number of military or spy movies when the protagonist is out in the middle of nowhere and grabs a phone to call in a strike and request support.
It makes those satellite phones that work anywhere — like the top of Mount Everest, the jungles of the Amazon or the middle of the Gobi Desert or Indian Ocean.
The company did not have an auspicious start in 1998, at the height of the dot-com bubble. It declared bankruptcy by 1999. Its grand idea of having 77 satellites circling the Earth, connecting people everywhere was bold — and expensive. And the money dried up.
But it was revived after the crash, and now launching satellites is much cheaper and easier. And it has created a large network of 66 satellites that circle the globe, connecting ocean-going vessels, aviators and far-flung land-based people with reliable communications to anywhere — and from anywhere — in the world.
The company has a reliable market, but its goal is to bring on consumers at some point. But that takes lots of money, especially to make it available for reasonable rates. This market is tough for that, but the stock is off just 22% in the past 12 months, all of that in the last month.
Since it has no dividend, this is a growth stock play. I do, however, have a growth and income opportunity available for you in my investment report, The Netflix of 5G.
AT&T (NYSE:T) is the original Ma Bell — the telephone company of America. It’s also one of the key telecom stocks in the U.S. And that means it’s big. If anything is happening in telecom that’s worth being involved in, T is there.
And it can afford to do that because it has a market cap of more than $200 billion. While it used to be the home to one of the most innovative research and development organizations in the world — Bell Labs — it now has a different approach.
When the new, disruptive technologies hit, T waits to see the best of the new companies and then buys them. That was the strategy with mobile, which was a game changer for T stock.
And now it’s in the content business with its acquisition of TimeWarner.
The fact is, it’s hard to imagine the U.S. without T. But that certainly isn’t the reason to own it. The reason for that is T knows how to run its business and do it profitably in good times and bad.
And its content acquisition means it can also diversify its revenue stream. And as I said before, there’s a lot of content streaming going on. Also, T is very involved in rolling out 5G, which will also be a huge opportunity.
The stock is off 11% for the year and 27% in the past 3 months. However, it’s well valued here and is delivering a solid 7.1% dividend to pay for your patience.
Vonage (NASDAQ:VG) was one of the pioneers of voice-over-internet protocol (VoIP) for consumers in the early 2000s. As mobile phones were still catching on, the new disruptive technology at the time was to use the internet to make phone calls.
The problem was connectivity was challenging — some places it was faster than others and service may be impossible in others. It was a gamble, but it paid off.
Since then, VG has moved into business services as well. And operations have moved to the cloud for even more service options. Ultrafast 5G wireless may provide further opportunities for this and many, many other companies (and their investors).
While the company only has a $1.6 billion market cap, it has a solid group of customers and remains a well-run business. Analysts are currently upgrading their ratings on the stock and it would also be a good buy for a larger telecom looking to expand its user base.
The stock is off 33% in the past 12 months and only 10% in the past 3 months. It’s a tempting takeover here.
Shenandoah Telecommunications (SHEN)
The last of my telecom stocks to buy is Shenandoah Telecommunications (NASDAQ:SHEN). It has been around since 1902, serving the rural communities of the Shenandoah Valley in Virginia.
It remains a relatively small firm, with a $2.4 billion market cap. But its service area now includes two large colleges and all the telecom needs — land based, broadband and mobile — for the students and the expanding communities and businesses. It has also expanded broadband into West Virginia, Maryland and Kentucky. And it owns 225 mobile towers in its service area, which is another great source of revenue, especially as 5G becomes more broadly deployed.
It will benefit from the Great Lockdowns that are now happening as well as population growth as people from the DC metropolitan area move out to exurbia and telecommute.
The stock is up 5% in the past 12 months, and up 13% in the past 3 months, showing that it’s a rock-solid stock when things get crazy. It has a 0.6% dividend.
Once those lockdowns lift, of course, it’ll be time to look at the big picture. And for telecom stocks — and many, many related names — the big picture is the 5G revolution.
The 5G Buildout Is an Incredible Opportunity for Investors Right Now
Within two years, most cell phones will be 5G enabled and be able to wirelessly handle television streaming. With 5G, we’ll have cable modem speeds on any device; no need to plug in. That’s a big deal for rural areas … the very same areas that are also key to President Donald Trump’s reelection. So, by pushing 5G over the goal line, Trump will deliver a big win for his base — and strike a blow against Chinese rivals like Huawei Technologies.
But, in the big picture, 5G is about much more than trade wars and faster downloads. Because 5G is 100 times faster than 4G, it’ll allow your internet devices to work in real time. That advancement is a game changer for tech companies.
With the 5G infrastructure market set to grow at an annual rate of 67% over the next 10 years, the entire market will go from $780 million to nearly $48 billion. This buildout is where I see opportunity with 5G stocks now.
Cable companies can do their best to fight back with fiber optics … but they can’t compete with the convenience of a smartphone, once it’s got ultra-fast 5G. That’s how my 5G infrastructure play will capture more market share from the broadband cable companies.
The stock I’m targeting is a favorite on Wall Street, and it has strong fundamentals, too — making it a “Buy” in my Portfolio Grader system.
When you do, you’ll see how to claim a free copy of my new stock report, The Netflix of 5G, which has full details on this company — and what makes it such a great investment.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.