We’re continuing our journey backward in time today, looking at another of your favorite articles from 2021.
Today, we’re going to look back at the 5G rollout — and how it represents a monumental leap forward in all aspects of technology… and how investing in the right 5G plays exponentially increases your profit potential in the years ahead.
Here’s a Better 5G Idea Than Warren Buffett’s New Trades
Note: This article was originally published on Feb. 20, 2021.
Recently, I’ve spotted stories about how 5G allowed in-person fans at the Super Bowl to enjoy “an unprecedented, interactive experience.”
For example, big-game attendees in Tampa were able to access data streams from stadium cameras on their phones and tablets.
In another story, I read about how an exhibition hall in Hanover, Germany, is setting up one of the largest 5G zones in Europe so that tech companies can… show off their 5G products.
I’m sure you’ve seen similar stories about 5G add-ons at airports, convention centers, resort hotels, arenas and casinos. And you’ve been told they will “improve the customer experience.”
Sounds great for wealthy world travelers.
But it doesn’t sound much like the “5G revolution” that I and others have touted. Moreover, those small-potatoes “improvements” certainly don’t seem to match up with the multibillion- and -trillion-dollar figures we see tossed around.
In January 2021, I told you about how U.S. wireless carriers like Verizon Communications (NYSE:VZ) and pay-TV providers Comcast (NASDAQ:CMCSA) bid close to $80 billion for access to 5G airwaves in auctions run by the Federal Communications Commission (FCC). That was far more than analysts’ estimates of $47 billion… and it smashed the old record of $45 billion in 2015.
Then, we learned that Warren Buffett is doubling down on 5G. According to a new filing with the U.S. Securities and Exchange Commission (SEC), Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) started up a new position on Verizon in the fourth quarter, spending $8.62 billion on 147 million shares. That’s in addition to the $982 million that Buffett’s team has spent on T-Mobile (NASDAQ:TMUS) shares since the third quarter of 2020.
Here’s how researchers at the World Economic Forum see it playing out, as they wrote in a white paper in 2020:
“Fast, intelligent internet connectivity enabled by 5G technology is expected to create approximately $3.6 trillion in economic output and 22.3 million jobs by 2035 in the global 5G value chain alone This will translate into global economic value across industries of $13.2 trillion, with manufacturing representing over a third of that output; information and communications, wholesale and retail, public services and construction will account for another third combined.”
Clearly, a 5G-enabled Davos and better Wi-Fi at Aspen alone aren’t going to get us there.
So, let’s take a closer look at what will get us there.
Still in the First Inning
This truly is a once-in-a-generation opportunity to invest in the beneficiaries of a brand-new “information highway” that is 100 times faster than the one we use today.
The globe’s up-and-coming 5G communications network is the next generation of mobile broadband that will replace or augment existing 4G LTE connections. 5G technology drastically improves upload and download speeds, while also improving latency, which is the time it takes devices to communicate with wireless networks.
The current 4G network delivers around 100 megabits per second. But once 5G rolls out, that number jumps to 10,000 megabits per second — or 100 times faster than the current speed.
What does “100 times faster” mean? It means that an entirely new generation of technologies may become feasible and flourish.
Whereas 4G provided the network speeds necessary to run online apps and mobile streaming, 5G represents a monumental leap forward. It provides the foundation for a whole host of “gee-whiz” technologies like:
- Autonomous vehicles.
- Healthcare technologies like telemedicine and remote robotic surgeries.
- “Smart factories” that integrate machine-learning processes with human oversight — known as “cobotics.”
- Internet of Things (IoT) — a vibrant, high-speed network of physical objects that are embedded with sensors, software and other technologies for the purpose of exchanging data and “communicating with” other devices, systems and/or people.
We cannot yet imagine what other innovations 5G will enable.
This is why the likes of the World Economic Forum and Qualcomm (NASDAQ:QCOM) estimate that 5G networks will generate a whopping $13.2 trillion in global sales activity by 2035.
But here’s the thing…
We’re still in the first or second inning of 5G deployment — and the investment opportunity here.
For all those “gee-whiz” technologies to become truly viable, we need a world that is truly 5G and not sporadically 5G. Those convention centers and stadiums we discussed above are examples of sporadic 5G deployment.
I believe this is probably the most powerful macroeconomic trend and investment trend before us right now.
Much as virtually every company jumped onto the internet in some way in the 2000s… and then into mobile in the 2010s… no company in the world, large or small, will be able to ignore 5G in the 2020s.
It’s going to be breathtaking.
That makes 5G a 10-year opportunity…
A Smarter Idea
In order to take advantage of that opportunity, in the years to come, we’ll layer in the companies that use 5G tech in novel ways.
But in these first innings, many investors, like Warren Buffett, are buying the builders of the 5G networks.
That’s not a bad idea.
But I think buying the hardware vendors — the “pick and shovel” plays — is a smarter idea.
Over recent days, two companies that I’ve recommended to subscribers of my elite trading service, The Speculator, have reported quarterly earnings that clearly demonstrate 5G technology is gaining significant momentum worldwide.
Let’s begin with the outstanding report from a global leader in wireless transport solutions. It designs, manufactures and sells a range of wireless networking products, solutions and services. The company’s products utilize microwave and millimeter-wave technologies to create point-to-point wireless links for short-, medium- and long-distance interconnections.
On Feb. 3, 2021, the company reported strong profit growth for its fiscal second quarter, while also raising its revenue and profit guidance for 2021.
On the back of this exceptional quarter, this company also raised the midrange of its revenue guidance for 2021 from $250 million to $260 million and significantly boosted its gross earnings (EBITDA) guidance from a midrange of $20 million to $29.5 million.
To put the icing on this earnings cake, five days after the report the company announced that a major pay-TV provider had selected my recommendation as a key supplier of 5G microwave transport.
The stock has responded to the flood of upbeat news by soaring as much as 69% since the day of the quarterly report… and analysts have been raising their earnings estimates and price targets on the stock.
My other 5G Speculator recommendation reported a near doubling of earnings per share (EPS) on a 17% jump in revenue. The company’s results were so strong that they exceeded the company’s year-end financial targets for 2020, as well as its targets for 2022, about two years early.
The company posted strong revenues and market-share gains in China, for example, which is now the largest 5G market in the world with more than 100 million subscribers. It also gained share in almost every other major market, including India, Southeast Asia, Australia and North America.
In aggregate, these two reports provide solid evidence that the 5G rollout is gaining momentum.
And they further underscore my central thesis for investing in the 5G sector: Because 5G enables so many different cutting-edge technologies, and renders them truly operable, no major company or country can afford not to invest in 5G capabilities.
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On the date of publication, Eric Fry did not have (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.