5G has been on the tip of every tech investors’ tongue, with the new infrastructure just beginning to make waves. The next wave of mobile connectivity is upon us, and it’s going to change the way the world connects. Hardware is expected to get a resurgence in demand, and this mobile renaissance is already being priced into stocks that stand to benefit like Apple (AAPL), Qualcomm (QCOM), and Verizon (VZ).
Over the last 52-weeks, AAPL has rallied over 100%. People are associating the massive run-up with the firm’s pivot to reliable subscription base income, which is becoming the standard revenue model for the most prosperous tech firms. Apple’s subscription segments are years away from being the company’s most significant profit driver. In the short run, the firm’s biggest potential topline driver is its upcoming 5G iPhone, which is anticipated to come out in the fall of next year.
Investors and traders continue to drive Apple’s shares further with no real fundamentals propelling it forward. AAPL is now trading at its highest forward P/E multiple in a decade. I would wait for a pullback in valuation before jumping into this tech behemoth.
Apple is the largest publicly traded company in the US and ostensibly represents the US’s consumer market. The company has a massive cash pile with an enormous amount of financial flexibility. The impending 5G tech wave is going to benefit Apple with the expectation of not only propelling its largest topline driver into growth (the iPhone) but making its connected services more attractive.
Qualcomm is the leader in 5G technology and controls the wireless handset market. The company has been facing some short-term headwinds with its most recent anti-trust ruling that illuminated some of Qualcomm’s anti-competitive behavior. The court ruled that it would need to renegotiate some of its most lucrative licensing deals. Qualcomm had already come to a settlement with its biggest customer Apple, which was a massive win for the company.
Despite the litigation concerns, QCOM has been able to drive its share price up 54% in the last 52-weeks.
Analysts have become increasingly optimistic about this stock, raising estimates, and propelling QCOM into a Zacks Rank #1 (Strong Buy). Look for further developments in its licensing deals as this drives a majority of this firm’s profits.
Verizon is one of America’s largest wireless service providers and is recognized for having the best service. This wireless powerhouse is building out its 5G infrastructure aggressively and is leading the charge among carriers.
Verizon has prided itself on having the highest quality service and has been able to charge a premium to customers for this superior service. This level of quality has already been seen with its 5G roll not only occurring faster than its primary rival AT&T (T), but its quality is far superior.
This superior service should propel Verizon’s flattening topline back into growth. VZ underperformed the market over the past 52-weeks due do some hiccups with its unlimited plan, but I see robust potential for this stock moving forward. These shares are trading at a valuation that is in line with the industry average. The company has strong cash-flows and a comfy dividend yield of 4%. This could be the time to buy VZ.
5G is going to make the world of tech a much more mobile place with its speed and connective ability allowing anyone to have the highest speed internet on the go. The companies that I discussed above are going to be positively impacted, along with many more. Hardware and mobile devices are going to see a resurgence in demand as this new wireless infrastructure gives them the ability to do things they would never have achieved previously.
Expect new growth in semiconductors as well, with devices being powered by these chips. We have already begun to see growth back into the highly cyclical semi stocks.
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