Hi
I've just joined and tried to search for the best 5G stocks to buy as I have been told they'd do well but could not and was then advised by the online help to open a discussion on it in the hope that some fellow members could help.
Many thanks
Abbas
Not that much choice - probably Spirent Communications (LON:SPT) and Calnex Solutions (LON:CLX) would be the best direct plays on 5G.
Spirent Communications (LON:SPT) is a decent company, the rating doesn't seem overly rich. Calnex Solutions (LON:CLX) is new to market, the price looks a bit high but its op margin and ROCE look superb. Neither company is carrying any debt, both look pretty reasonable investments.
You might also look at Intertek (LON:ITRK) which does 5G testing, but that's far from a pure play. Bu they're an interesting company in their own right.
No doubt there are others, but thst's what comes to mind.
timarr
Hi Abbas, not my area of huge expertise, but a couple that spring to mind are Calnex Solutions (LON:CLX), Mti Wireless Edge (LON:MWE) and £SPT. You could also get more generalised exposure I suspect through a bigger conglomerate such as £VOD. I own Spirent Communications (LON:SPT) as I like its exposure to the U.S. market, strong balance sheet and a valuation that is not too racy (of course it is not cheap, but nothing in the sector is). It's growth has been a little pedestrian of late, but hopefully that should accelerate going forward as the 5G rollout takes place. They release their full year results next Thursday so let's see what that brings! All the best and I'm interested to see what others think on this issue.
I guess it depends on where on the 5G spectrum you want to be.
You could say that any of the mobile phone companies will benefit from widespread take up of 5G - more and fast data speeds could be good for business although many of those in this sector already offer unlimited data deals. Will they continue to do so or will you have to pay extra to get the full benefit of 5G.
You could look at mobile phone manufacturers (Apple, Samsung etc. etc.) they're already producing 5G handsets but will everyone want one once 5G is everywhere (which it isn't at the moment).
You could look at semiconductor manufacturers - lots of faster and faster chips needed for all those phones.
You could look at suppliers to the semiconductor manufacturers - ITM Power (LON:ITM) (I hold) manufacture the wafers used to make semiconductors and much else in the new high tech world.
You could look at manufacturers of almost everything electrical - apparently they're all going to be part of The Internet of Things and going to be connected, much of it via 5G
Have a think about what sort of companies are going to benefit most from 5G.
Or you could look out for an ETF that holds shares in many of these type of companies. Just start your search by Googling ETF 5G and then start reserching.
Not single company specific, but there is the February listed investment trust Cordiant Digital Infrastructure (LON:CORD) as a 5G play.
Cordiant Digital Infrastructure Limited is the first UK investment company providing investors with dedicated exposure to the core infrastructure of the digital economy. The Company will invest in Data Centres, Telecommunications Towers and Fibre Networks in the UK, Europe and North America to seek to generate attractive total returns of at least 9 per cent. p.a. over the longer term (comprising capital growth and a progressive dividend). Corporate website
It has the early mover advantage of listing prior to the offering by Digital 9 Infrastructure, scheduled for sometime in March. Expect further listings in this developing asset class.
CMC run a 5G basket index which includes 21 global stocks with substantial exposure to 5G technology. Here is a link which sets out a list of the companies in the basket that you might want to follow up on. I don’t have an account with CMC but if I did the basket does look a good entry point to get a nice diverse spread.
https://www.cmcmarkets.com/en-...
A lot of US names as you would expect. I’d possibly add Erickson and Nokia if you want some European-centric exposure and I would agree with timarr that Spirent Communications (LON:SPT) are worth a look (I hold a few).
Gus.
Not sure that CMC list has any great insight but at least it includes SWKS who I gather should become one of the larger 5G modem suppliers. Strange to see AMZN on their list and I didn't think INTC are particularly strong in mobile. QRVO perhaps? Huawei would be an obvious choice but is privately owned obviously.
Perhaps irrationally, I'd be wary of the big network operators. Looking at Vodafone (LON:VOD) revenue has been static/declining over 5 years. At least in the UK, I sense that 5G will involve huge capital investment given the number of mini base stations required and yet competitive pressures, ease of switching and customer price resistance (both retail and business) will limit the extent to which they can charge more for marginal improvements in speed/capacity. Eg just look at how much more data you get for your £10 pm now compared with 3-5 years ago. We've been on the tipping point of mobile data speed and cost approaching fixed broadband levels for a couple of years and many millennials don't bother with the latter- 5G should accelerate that trend. Clearly this is a UK-centric view - maybe other territories will give the network operators greater pricing power?
Will 5G lead to a surge in the number of cellular devices? I'm not sure. Autos are gradually gaining their own connection (and autonomous might require two connections for redundancy) but most people require just one (or at most a personal and business connection). Most IoT devices in the home will connect through the domestic wifi I assume, while wearables presumably use BLE/ANT+ to connect to the host smartphone. I can see people getting annoyed if they have to buy multiple cellular contracts but it's quite plausible you will be offered a master contract that covers several devices perhaps?
My amateur navel gazing suggests that businesses building the nuts and bolts of the infrastructure roll-out might be the sweet spot. (Though this has a horrible resonance with the claims during the dot com bust that companies providing the picks and shovels of the internet revolution would magically be exempt from the fallout!)
Kitten video watching on mobiles may become even more prevalent under 5G, which points to more data center activity. Good for chip makers generally - TSMC and Samsung being the world dominators according to the Economist.
I'm not sure there are that many English quoteds active in these fields. Tern (LON:TERN) is into IoT protocols but is a tiddler with minimal revenue. Iqe (LON:IQE) operates at a higher level (wafers for compound semi-conductors) but has been a serial disappointer to date and Graham Neary (who used to co-write SCVR) was always negative as the business seemed cyclical, low margin and capital intensive (and also runs the risk of having AAPL as a major end-customer - which didn't end happily for either Imagination Technologies (LON:IMG) or Volex (LON:VLX) )
You might garner ideas looking for industry papers and annual reports of the more focused tech ITs. I had a quick scan through ARK's recent Big Ideas paper but it had little mention of 5G specifically. It had a strong pointer to RISC computing which plays to ARM's strengths - which may or may not fall into NVDA's hands.
I'm surprised no-one has mentioned Nasdaq listed Qualcomm (QCOM). It is by far the best single stock to get direct exposure to 5G mobile chipsets and IP licensing IMHO. I also like their recent purchase of Nuvia which will take them into the low power data center chipset market.
All the best, Si
MWE an Israeli company on AIM make and install 5g Antennae.
Spirent (SPT) wifi testing equipment have just purchased specialist 5g American company Octoscope for $55 million with a further $18 million depending on performance.
CNC on AIM make processors in partnership with CommAgility for 5g.
The good thing about these 3 is they are well diversified in other tech fields apart from just 5g, I think I have them in order of weighting in 5g, more by guesswork!
CNC and SPT have been off the pace on share price a bit the last few months. Spt results out soon (next week?) which maybe a bit flat this year. CNC had above market expectations but drifted since with fairly heavy selling recently. Personally I'm buying both. MWE has done very well this year having doubled. I sold but maybe too soon. GL
Honestly, I wouldn't waste my time with any UK listed shares if you want exposure to 5G technology. Currently, Qualcomm is on a forward P/E of about 18, with a 2% dividend yield and a rock solid balance sheet. They have a dominant patent position which means everyone else who wants to be in 5G has to come and knock on their door - if 5G was a road, everyone has to pay Qualcomm a toll.
See: https://www.forbes.com/sites/m...
All the best, Si
Great tip on Qualcomm, but the sentiment on large-cap US tech has turned negative so there may be better buying opportunities later on. These big stocks regardless of fundamentals are likely to be dragged down in the near term by outflows from funds, ETFs, trackers, momentum strategies and the like.
you're right. I think the US stocks will do better than the UK. Had Qualcomm but sold them after what happened to Jack Ma in China. But I will buy them again.
Great tip on Qualcomm, but the sentiment on large-cap US tech has turned negative so there may be better buying opportunities later on. These big stocks regardless of fundamentals are likely to be dragged down in the near term by outflows from funds, ETFs, trackers, momentum strategies and the like.
Tbh I'm probably the wrong person to address any comment about fund outflows etc. or market timing to. It is just my humble opinion, but trying to time trades is only for people who are fooling themselves it is something they can do reliably. This is about time in the market, not timing the market. If you want to gain from exposure to 5G technology then you'll need at least a 3 year time frame, possibly longer for it to fully play out. In the meantime, Qualcomm looks on an undemanding rating for a company with 60% gross margins and ROCE north of 20%.
All the best, Si
