When our teenagers first got cell phones in the mid-2000s, one of the first things they did was stock up on ringtones.
Remember those? Young folks used snippets of pop songs as personal ringtones. Sometimes they’d buy dozens of them — one for each contact — and parents would get stuck with the bill.
Ringtones even spawned a hip-hop subgenre, and Billboard tracked their sales for a while.
But then, in the early 2010s, people slowly stopped using songs as ringtones. Now, I can go weeks between hearing obnoxious ones… even if I’m hanging out at the Santa Monica Pier.
It might seem like ringtones were a passing fad, like pet rocks or fidget spinners. Actually, they were a victim of 4G.
As the then latest-and-greatest broadband cellular network technology started to flourish about 10 years ago, our cell phones became smartphones. We stopped using them as, well, phones, and they became texting devices (and a whole lot more, of course).
4G made that possible.
And how about blogs? We once spent hours reading them on our desktop PCs. Now we “follow” people by scrolling social media on those smartphones.
The decline of ringtones and blogs are just a couple of the “quieter” results of the rise of 4G.
Other impacts are much more in-your-face.
Consider the near demise of the taxi industry. Uber was just a great idea until 4G made it possible for us to make complicated transactions with our phones. Consider that every Uber ride requires multiple parties to line up mapping, communications, and money transfers, all with just a swipe or two.
And thanks to 4G, we now stream Netflix Inc. (NASDAQ:NFLX) or Disney+ before bedtime instead of renting DVDs or watching cable.
These were big changes. They changed the way we invested.
And they provide a “blueprint” for how we will invest in 5G…
How to Make Money From the 5G Rollout
Once you realize how big and revolutionary 5G will be, your next question might be, “What stocks should I buy to play this megatrend?”
If that’s on your mind, I have great news for you… Your understanding of 5G’s power can deliver extraordinary financial rewards.
The way the 4G revolution played out in the stock market from 2010 to 2020 gives us a clear “investment blueprint” that can guide us to the best 5G investments.
4G was a quantum leap over the early communication networks that enabled cell phones. It vastly increased the capacity and speed of our communications network, which allowed us to “unlock” the benefits and usefulness of smartphones.
Innovative businesses and their profits burst forward… creating a flood of wealth for people smart enough to capitalize on it.
For example, investor Chris Sacca put $300,00 into Uber Technologies Inc. (NYSE:UBER) just before the 4G rollout. When Uber went public, Sacca’s stake was worth more than $1 billion.
That’s a more than 3,000-fold return.
Or, take Square Inc. (NYSE:SQ), the mobile payment company. It started out making the devices that allow businesses to process transactions on smartphones.
It’s a business model that was unlocked by 4G… and it became so popular that Square stock soared more than 20-fold from its 2016 levels!
Thanks to its brilliant business model and the 4G network, Netflix stock soared 6,333% from 2010 to 2020.
If you can stop for a moment and think about the businesses a huge new communication highway will give life to, you can make similar returns.
Qualcomm estimates that 5G networks will generate a whopping $13.2 trillion in global sales activity by 2035. The table below shows the five industries that stand to benefit the most.
Clearly, we’re on the cusp of a 5G revolution… and this revolution will create enormous opportunities for select companies and their shareholders.
Right now, it’s too early — or at least too risky — to guess who the next Uber or Netflix will be. While we can make some educated guesses — autonomous vehicles, remote surgery — we don’t know yet what 5G will cause to disappear quietly from or lives… or what wildly inventive innovation will seem like old hat five years from now.
But we do know that someone needs to build the 5G infrastructure that will make those innovations a reality.
This 5G infrastructure opportunity is still in its infancy, which means it will produce a growing list of winners over time.
At this early stage of the game, I’ve identified one company as one of the best bets…
Without This Company, There Is No “Next Netflix”
This 5G infrastructure company — which I follow for members of my Fry’s Investment Report investment letter — recently issued a surprisingly strong quarterly result. It delivered 9% revenue growth year-over-year, driven by a hefty 28% jump in revenue from its network infrastructure division.
Regionally, some of its largest markets produced some of the largest revenue gains. In particular, North America, China, and India all logged double-digit growth.
This robust revenue growth enabled it to post earnings per share (EPS) of $0.05, which topped analyst estimates by 150%. The company also produced more than $1 billion in free cash flow — lifting its one-year free cash flow to nearly $3 billion.
This company’s turnaround is real, and it possesses the potential to generate impressive growth over the next few years.
The company is capitalizing on that momentum. It now has more than 150 commercial 5G deals and well over 50 live 5G network deployments. If paid trials were added to the mix, the number of total 5G agreements would exceed 200.
Moreover, this solid report chased away some of the skepticism that has surrounded the stock for years. Wall Street analysts are boosting their 2021 and 2022 earnings estimates by about 20%.
But I would not be surprised if the company exceeded these new and improved estimates. The stock remains an excellent play on the “longer and bigger” 5G boom that is now underway.
The stock might not produce explosive results over the near term, but I expect it to become a very profitable, and potentially explosive, long-term winner as the 5G buildout continues.
I’m working hard to identify and profit from the next Netflix… the next Square… the next Uber.
This company is developing and laying down the 5G infrastructure now to make their future innovations possible. You can find out much more about it as a member of Fry’s Investment Report by clicking here.
Well, the whole world has changed since then… and I’m back to talk about the Technochasm, the biggest megatrend in investing, in ways I couldn’t before… and discuss opportunities for even bigger market gains… the kind to keep you from falling behind.
And I’m bringing along investing legend Louis Navellier to join me on camera. Click here to check out our conversation – and to get my No. 1 stock pick right now.
NOTE: On the date of publication, Eric Fry did not own either directly or indirectly any positions in the securities mentioned in this article
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls —in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.