Many investors have grown wary of tech stocks in 2022. That’s understandable given the broad pullback that’s hit so much of the tech sector this year. Economic factors like interest rates and inflation are muddying the picture further for many of these companies by threatening consumer spending. That makes the prospect of buying on the dip somewhat risky. However, there is a part of this sector where the prospect of growth is more promising, despite the macro factors at play. In fact, some of these stocks are already showing big gains for 2022. I’m talking about telecom stocks.
The pandemic accelerated our need to be constantly connected. It also happened to interrupt several large scale telecommunications initiatives that were underway, including the expansion of 5G and fiber optic networks. With lockdowns over and supply chain challenges becoming more manageable, those efforts are hitting full speed once again.
If tech stocks in general feel too risky for you right now, here are seven telecom stocks that are positioned to deliver long-term gains:
- Apple (NASDAQ:AAPL)
- Ciena Corporation (NYSE:CIEN)
- Clearfield (NASDAQ:CLFD)
- Gogo (NASDAQ:GOGO)
- Optical Cable Corporation (NASDAQ:OCC)
- Orange SA (NYSE:ORAN)
- Qualcomm (NASDAQ:QCOM)
To help make the case for investing in these companies, each of these telecom stocks has been run through Portfolio Grader. The resulting rating gives you a very good indicator of the growth potential and whether a stock deserves a spot in your portfolio.
Telecom Stocks to Buy: Apple (AAPL)
You might wonder what Apple is doing on this list. After all, with AAPL stock down over 8% so far in 2022, it’s an example of the tech stocks that have been scaring people off. However, there is a reason I’m slotting Apple in among these telecom stocks: the 5G iPhone SE3.
I’ve actually written an article based solely on this upcoming device and the potential it holds for Apple. Here’s the thing. With 5G cellular networks going mainstream, consumers are looking to upgrade. However, they don’t all want to spend flagship smartphone money to get it. Those concerns about inflation and interest rate hikes cutting into consumer spending actually reinforces this attitude.
Apple is expected to release the 5G iPhone SE3 in a matter of weeks at a March special event. The iPhone SE3 gives buyers 5G and Apple quality in a low-cost smartphone. There is a huge potential market for this device. As I wrote in early February, this includes 300 million owners of older iPhones, plus the estimated 1.4 billion people who own low and mid-range Android smartphones.
Imagine what would happen if even a fraction of these 1.7 billion people upgrades to an iPhone SE3 to get affordable 5G access? That’s why AAPL stock is on this list of telecom stocks to buy for March.
At the time of publication, AAPL stock earned a “B” rating in Portfolio Grader.
Maryland’s Ciena is a telecom stock that’s focused on networking. The company offers services and hardware used by the telecommunications industry and cloud computing companies. This includes equipment like switches and the software to control it. The reason I like Ciena is its leadership in areas like fiber optic and 5G solutions.
The demand for its cutting-edge networking solutions was on full display last December, when Ciena reported its fourth quarter earnings. Revenue was up 25.7% year-over-year (YoY). With the U.S. government looking to invest billions in the country’s fiber optic network to improve broadband internet access, the future is looking even better for Ciena.
The current Portfolio Grader rating from CIEN stock is “B.”
Telecom Stocks to Buy: Clearfield (CLFD)
Let’s taker a deeper look at fiber optic cables. This advanced technology transmits data using pulses of light — it’s the technological miracle that makes 4K video streaming practical and supports 5G. Telecoms are investing in fiber optics in a big way. Billion-dollar deals are being signed. However, fiber optics can be much more challenging to work with than traditional copper cables.
This brings us to Clearfield. The company’s specialty is in designing fiber optic deployment and management solutions. Clearfield products are used in last-mile applications, connecting fiber optic networks to homes, businesses, and enterprise sites. Fiber installation is accelerating in the U.S. and globally, and that is going to pay off handsomely for CLFD stock.
Plugging CLFD stock into Portfolio Grader, you’ll find this telecom stock earns a “A” rating.
Air travel was one of the hardest hit sectors during the pandemic. With passengers in lockdown, international travel restrictions, and planes grounded, airline stocks fared miserably. The growing air travel recovery is good news if you own airline stocks. It is also good news for related services. And it’s projected to get even better. After being interrupted by the omicron outbreak, global airline revenue is expected to return to growth in 2022. Even then, it still has a way to go before full recovery to 2019 levels.
This brings us to Gogo. This Chicago company is in the business of supplying internet service to commercial airlines and business aircraft. People want to stay connected at all times, even when they’re flying. As air travel has begun to recover, GOGO stock has been on the rise. It’s one of those stocks that has defied general trends to post growth in 2022 — with a gain of 4.5% since the start of the year.
In its third quarter, Gogo reported revenue up 30%. The company is due to report Q4 earnings on March 3. Keep your eye on this telecom stock because the sector it’s connected to is well on the path to recovery.
GOGO stock currently earns a “B” rating in Portfolio Grader.
Telecom Stocks to Buy: Optical Cable Corporation (OCC)
I’ve already talked at length about the importance of fiber networking and how it is going to be a growth catalyst for several telecom stocks. Let’s not forget a company that actually manufactures that optical cable.
Virginia’s Optical Cable Corporation is a big player in the industry. OCC is the second-largest supplier of multimode fiber optic cable for the North American enterprise market and also supplies fiber optic cable to the Department of Defense.
OCC stock has been caught up in the 2022 market pullback. However, between the March 2020 market crash and Dec. 17 2021, OCC shares delivered an impressive 175% return. With OCC shares currently off that December high close by 28%, there’s opportunity to pick up this telecom stock on the cheap and enjoy that long-term growth even more.
At the time of publication, the Portfolio Grader rating for OCC stock was “B.”
Orange is the largest cellular provider in France. The company has a growing presence in other markets (including Romania, Spain, Belgium, the Middle East, and Africa), and new lines of business (IT services, cybersecurity, and banking). Orange also claims to be the European leader in fiber optic connectivity (there’s that fiber optics again), with 56 million connectible households across the continent.
Orange delivered its full-year 2021 results in February, and the market liked what it saw. The company’s CEO predicted that the performance will continue, telling investors:
Indeed, Orange has delivered on its commitments and is confirming all its objectives for 2023, including organic cashflow of between 3.5 and 4 billion euros.
It’s hard to argue with the performance of ORAN stock in 2022. So far this year, it is up 6%. Based on what Orange’s leadership is reporting, that trend is likely to continue through 2023.
The current rating for ORAN stock in Portfolio Grader is “B.”
Telecom Stocks to Buy: Qualcomm (QCOM)
Finally, we have Qualcomm. Shares in this technology giant were poor performers for several years, but that changed in 2019. After reaching a settlement in its ongoing legal battle with Apple, QCOM stock surged. Since then, QCOM has been on an upward trajectory.
The latest catalyst for growth has been the rush to 5G adoption. Now, Apple may be eying the 1.4 billion people who own low and mid-range Android smartphones, but guess who makes the processors in those phones? And in the flagship Android phones? For the most part, it’s Qualcomm. QCOM also supplies the 5G modem chips found in the iPhone, although in 2023 it’s expected Apple will move to a custom chip. In other words, Qualcomm is cleaning up in the 5G smartphone upgrade cycle.
QCOM stock is down 12% so far in 2022 — despite an earnings report at the start of February that showed revenue up 30% YoY along with earnings per share (EPS) up 41%. That offers an opportunity to pick up shares in this telecom stock at a nice discount before the market comes to its senses and QCOM kicks back into growth mode.
QCOM stock is currently rated as a “B” in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in CLFD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.