The Best Way to Play the 5G Rollout

As the world hunkered down for the pandemic, individuals and companies around the globe turned to the internet to stay connected and keep business up and running.

The phrase "5G" in bubbles above a cityscape.

Source: Shutterstock

And thanks in part to the fifth generation of wireless technology known as 5G, internet speeds have not only kept pace with the surge in demand but have accelerated.

Mobile download speeds rose 59.5% this July from a year prior and are up 194.0% from June 2017, according to the Speedtest Global Index. Speeds only stalled for two months — February 2020 and March 2020 — as initial lockdowns triggered across the globe.

And it’s hardly a surprise that nations with the fastest mobile download speeds, like the United Arab Emirates, South Korea and China, are investing more and more in the 5G rollout.

Apple Inc.’s (NASDAQ:AAPL) first 5G-enabled smartphone, the iPhone 12 released last year, was wildly popular. The company sold 100 million units in seven months — two months quicker than the iPhone 11 and about the same pace the iPhone 6 reached during the peak of the 4G transition.

And as Apple just released its new iPhone 13 (I’ll talk more in-depth about Apple’s latest event tomorrow), the company could sell as many as 200 million devices this year, adding to the expected sale of 605 million 5G-enabled smartphones worldwide in 2021, according to Counterpoint Research.

The iPhone 13 has an updated modem — QUALCOMM Inc.’s (NASDAQ:QCOM) x60 — that will allow U.S. carriers to offer improved, lower-latency 5G coverage on the new phone over last year’s model.

In fact, the iPhone 13 could roughly double the 15% of iPhones around the world currently with 5G. That in turn could ramp up pressure on carriers to upgrade their networks to handle the increased demand.

A bumpy rollout of 5G across carriers in the U.S. has been frustrating for consumers, but about $80 billion worth of new C-band spectrum licenses purchased by AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) in February will boost 5G infrastructure when it starts to come online in December. Meanwhile, PCMag recently found that T-Mobile US, Inc. (NASDAQ:TMUS) provides the country’s fastest and most robust 5G mobile network by using mid-band airwaves purchased during its acquisition of Sprint in 2020.

5G-enable phones using T-Mobile’s services had 5G capabilities in cities like Chicago, Las Vegas and New York about 90% of the time.

Of course, the lightning-fast connectivity of 5G is set to impact more than just smart phones.

5G will fuel the growth of smart cities, connecting everything from lighting, parking, traffic and waste management to safety and security. 5G will also help revolutionize manufacturing, energy, artificial intelligence (AI), virtual reality, gaming and healthcare — basically any sector that can benefit from near real-time connectivity.

The market for what’s known as the Internet of Things (IoT) — essentially all of these billions of devices connected to the internet — is expected to reach $1.6 trillion by 2025, up from an estimated $418 billion this year, according to Statista.

And the process is already underway.

QUALCOMM and Ericsson just successfully tested new radio access technology being built for 5G — basically a new communications standard designed for 5G’s massive data loads in Texas.

The idea of this new technology is to allow for private cellular networks with advanced response times and more reliable connections that can be used on the factory floor.

Simply put, the transition from 4G to 5G could be one of the biggest trends of this year and next. And the companies building the machine learning programs, data analytics and sensors needed for the rollout of the IoT are booming.

The Crème de la Crème of 5G Stocks

Case in point: KLA Corporation (NASDAQ:KLAC).

KLAC is one of the biggest semiconductor equipment manufacturers in the world. And it’s helping create, and profiting from, almost every aspect of 5G, with a focus on machine learning, electron and photon optics, data analytics and sensors. The company is doing so by developing solutions that enable the next-generation technologies enhanced by 5G, including the cloud, robotics, IoT and autonomous vehicles.

And it’s clear that this fundamentally superior company’s focus in this space is helping boost its top and bottom lines…

After topping analysts’ earnings and revenue forecasts in late July for its fourth quarter in fiscal year 2021, KLAC increased its quarterly dividend by 17%. It was the 12th-straight dividend increase, and the company will now pay a dividend of $1.05 per share

For its fourth quarter, KLAC achieved earnings of $684 million, or $4.43 per share, and total revenue of $1.93 billion. That was up from earnings of $2.73 per share and revenue of $1.46 billion in the fourth quarter of 2020. The consensus estimate called for earnings of $3.99 per share on $1.87 billion in revenue, so KLAC posted an 11% earnings surprise and a slight revenue surprise.

Looking ahead to its first quarter in fiscal year 2022, KLAC expects revenue between $1.92 billion and $2.12 billion and earnings per share between $4.01 and $4.89. In comparison, KLAC reported earnings of $3.03 and revenue of $1.49 billion in the first quarter of fiscal year 2021.

Seventeen analysts on Wall Street have revised their earnings estimates higher for KLAC over the past three months, and now expect earnings of $4.50 per share, or 34% higher than a year prior, when the company is slated to announce its first-quarter results on October 29.

I recommended the stock to my Growth Investor subscribers back in November 2019. Year-to-date, the stock is up over 42%, more than double the NASDAQ’s 17% gain and the S&P 500’s 18% rise.

The company is a “Buy” and currently earns a Total Grade of “B” in my Portfolio Grader, as well as a “B” for its Quantitative Grade, which represents strong institutional buying pressure under the stock.

Of course, that’s not the only fundamentally superior stock that’s helping usher in the 5G revolution on my Growth Investor Buy List.

In fact, this company is currently sitting among my Top 5 on the Growth Investor Buy List.

The company operates in dozens of countries around the world and has strategic partnerships with big-name corporations like Microsoft Corporation (NASDAQ:MSFT), Adobe Inc. (NASDAQ:ADBE) and, Inc. (NYSE:CRM).

During the second quarter, the company topped Wall Street’s earnings and sales estimates. Looking forward, it also expects fiscal 2021 earnings to rise over analysts’ estimates.

The stock earns a Total Grade of “A” in my Portfolio Grader, with an “A” for its Quantitative Grade that shows strong institutional support under the stock.

So, my Growth Investor subscribers have multiple opportunities to benefit from the 5G trend.

If you sign up, you can read my exclusive report — The #1 Investment for the Coming 5G Revolution — that explains what 5G is about and why it’s so important for our technological future.

You can get the full details by clicking here.


Louis Navellier

P.S. Right now, successful Americans like us have a bullseye on our back.

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If you have any money in savings, in the stock market, in a 401k or even cash stuffed under the mattress, this should make the hair on your neck stand up.

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The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

T-Mobile US, Inc., KLA Corporation, Microsoft Corporation

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