Communications stocks are arguably more important than ever. Whether it is broadband internet, text messages, telephone calls or voice mail, communications dominate our daily lives more than at anytime in human history. The companies that build the infrastructure, equipment, and technology that enables today’s sophisticated communications are, for the most part, essential to our modern and advanced economy. Furthermore, this has led us to making this list of communication stocks to buy.
For investors looking to capitalize on leading technology stocks, they should consider acquiring shares in communications companies. While they can be prone to economic cycles, communications stock have a long-term track record of delivering returns to stockholders. Here are the three best communications stocks to buy now: September 2023.
Charter Communications (CHTR)
It’s currently embroiled in a nasty “carriage fight” with Walt Disney Co. (NYSE:DIS) over how much it will pay the House of Mouse to carry its popular TV channels such as ESPN and FX, but Charter Communications (NASDAQ:CHTR) still has a lot to recommend it. This includes 15 million pay-TV subscribers. The company is also the fifth-largest telephone provider in the United States based on its number of residential lines, and the second-largest cable operator in the country. In all, the telecommunications company has more than 32 million customers spread across 41 states.
Beyond the dispute with Disney, which is common in the television industry, Charter Communications is benefitting from President Joe Biden’s administration’s push to bring broadband internet access to rural regions of the U.S. In late June, CHTR stock popped more than 12% in a single trading session after the White House said it plans to spend $42 billion to ensure all Americans have access to affordable high-speed internet by 2030. Charter is undertaking what it calls a “rural construction initiative” to bring internet access to underserved areas of the U.S., aligning its interests with those of the White House.
After a steep selloff during the 2022 bear market, now looks to be an opportune time to buy CHTR stock. The company’s share price is up only 3% in the last 12 months and trading at just 13 times forward earnings, making it look undervalued at current levels. This easily earns its spot on our list of communication stocks to buy.
Ciena Corp. (CIEN)
Ciena Corp. (NYSE:CIEN) is another telecommunications company whose networking equipment and software helps make internet connections and communications possible in most areas of the U.S. Ciena has been described as the “world’s biggest player in optical connectivity,” with its technology facilitating high-speed internet connections in communities large and small. Customers who use its internet equipment in their networks include communication giants such as AT&T (NYSE:T) and Verizon (NYSE:VZ). With 8,000 employees and more than $3.5 billion in annual revenue, Ciena is a growing company that deserves a look from investors.
While CIEN stock has gained 55% over the last five years, it has pulled back 6% this year due to concerns about softness in fifth generation (5G) internet rollout. However, the company has managed to offset that pocket of weakness with growing demand for its hardware from cloud computing providers. Strong sales to cloud providers drove Ciena’s most recent financial results past the expectations of Wall Street analysts and have helped its stock recover some in recent months. The company also continues to repurchase its own stock at a decent clip.
San Francisco-based Twilio (NYSE:TWLO) provides communication technology and equipment that is needed to send and receive telephone calls, as well as text messages and web-based communications. Its products are essential to facilitating high-performing communications across the U.S. Founded in 2008, Twilio was the first company to make and receive phone calls completely hosted in the cloud, and it helped to pioneer the text messages that we send and receive everyday. Since going public in 2016, Twilio has used a strategy of acquiring smaller communications companies to grow its business.
TWLO stock has struggled due to the company’s lack of profitability. While the share price is up 150% since going public in June 2016, the stock is down 20% throughout the last five years and is flat throughout the past 12 months. After some costly acquisitions in recent years, Twilio is showing some improvement on the financial front, announcing that its Q2 revenue rose 10% from a year earlier to $1.04 billion, which was better than the high-end of its guidance for the quarter. The company also used some newly found free cash flow to buyback $485 million of its own stock in this year’s first half, demonstrating that it is one of the best communications stocks to own. This and the other companies are all amazing communication stocks to buy.