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The initial 5G networks went online in 2018, but this massive project will include a ton of cooperation and investment from many different categories, including semiconductors, tech companies, equipment & infrastructure, and even real estate.
The even better news is that there’s going to be a ton of opportunities for tiny investors like us to get our share of the big 5G pie.
This blog is part 2 of 3 of the best 5G stocks to buy. In part 1, we discussed the three categories of 5G companies, namely semiconductor, infrastructure and real estate, and let you know about the best 5G stocks to buy in the semiconductor category.
In this part, we’re going to reveal the top 5G stocks to buy in the equipment and infrastructure category and analyze each of them from a fundamental, technical and sentimental point of view.
The next part will be about the best stocks in the real estate category, and what are some ETFs that you can invest in to get a piece of the 5G pie.
5G Stocks to Buy
5G technology doesn’t only include telecom companies but a lot of other ones, such as infrastructure companies, tech companies, and 5G device manufacturers.
Infrastructure and equipment companies include all the companies that either manufacture the equipment required for 5G or build the infrastructure that is needed for the deployment of the technology.
Today, we’re revealing 4 such stocks from the equipment and infrastructure category that you can consider having in your portfolio. So let’s begin!
1. Apple (AAPL)
First in the list is the largest cap company in this category, with a whopping $2.03T in market cap, Apple.
Although limited in scope, 5G networks are already here. The only issue apart from living in a compatible location is that you also need a 5G-enabled phone.
Most phone makers, along with Apple, have already released their 5G smartphones, but that only can’t be the basis of our investment strategy. For that, we have to analyze the stock on its fundamentals.
One of the biggest positives with Apple is its huge user base that is still growing in the emerging markets regardless of 5G.
Also, Apple users are considered the most loyal ones, and the company is still innovating things such as Apple TV, Apple Pay, and Apple Watch to retain their loyalty.
On the flip side, Apple’s premium pricing is keeping it from growing exponentially in the emerging markets, especially in second and third-world countries.
There are also questions regarding its AI, which is more secretive as compared to Google who publishes its research openly. So that’s another negative about the company.
AAPL also pays a tiny dividend yield of 0.68%, but considering how valuable the stock is, you can buy more of it to collect higher dividends.
Talking about the technicals, the interesting thing about AAPL’s price action is that every time it reaches a peak, it retraces back to 50% Fibonacci levels. However, last time it touched the 68% retracement level as well.
So if this pattern continues, you can wait for AAPL to make a top and then apply the Fibonacci retracement on the charts to place buy limit orders at 38%, 50%, and 68% retracement levels.
The next 5G equipment company is Samsung, listed on South Korea’s stock exchange as 005930.KS. Now, if you’re not in South Korea, getting your hands on the Samsung stock is pretty tough.
American investors can’t buy Samsung’s shares the way you typically buy stocks through major US exchanges like Nasdaq and NYSE.
Individual shares of Samsung must be purchased either over-the-counter as a pink sheet stock, which means your purchase isn’t regulated, or on the Korean exchange, which will require you a South Korean brokerage account.
Most investors don’t prefer the OTC (over-the-counter) route for it isn’t regulated. So the easiest way to get your hands on the Samsung stock is through an ETF, which we’ll talk about in the third part of this blog in greater detail. But for now, let’s have a look at Samsung stock individually.
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A good thing about Samsung is that it is maintaining its technology leadership in memory, with its latest 1Q20 preliminary results indicating an above-consensus result. Also, the company has robust sales growth numbers for its 5G devices.
A not-so-good thing about the company is that it is doubling down on the PC market, which is already maturing, especially in an era where smartphone screens are getting bigger and bigger.
Also, Apple is still ahead of Samsung in smartphone sales numbers. And nowadays, it has also lost its advantage of being cheaper than Apple phones.
Currently, the stock is correcting a little after a huge rally of more than 50% and has already reached the 23% Fibonacci retracement level.
If you’re a risky trader, the current price might be appropriate to start with if the stocks show some kind of reversal. If you wanna be on the safer side, wait for 38% and 50% retracement levels for a buying opportunity.
3. Corning (GLW)
The next 5G stock to buy is something that you may not have heard of, and that is the 5G equipment company, Corning.
Before it gets turned into a high speed Wi-Fi signal, 5G data actually needs to travel along the wired internet, just like other data, and that’s where the fiber-optic cable comes in. Corning, the veteran glass and ceramic manufacturer, is the top provider of fiber optic cables.
Even as they deploy new radio towers, telecom providers would also need to think about high speed cables.
Corning is a top supplier for many of those companies. It is also getting into small cell antenna space, partnering with Qualcomm, which we covered in the first part of this blog.
It has a market cap of $28.8 billion and the company has a long history of dividend payments at a 2.56% yield.
Corning’s fans say that the ability to create thinner, larger glass substrates should support the ongoing demand for larger LCD panels. Data requirements from IoT, 5G, and autonomous driving should also support ongoing optical fiber demand.
The critics of the company say that the high capital intensity will remain an obstacle to free cash flow conversion. Corning’s exposure to consumer discretionary spending can also cause the company’s revenue to fluctuate significantly.
On the price charts, Corning has shown a nice recovery after taking a huge hit during the Corona crisis and is currently trading at a 20-year high of around $37.
While trading at such high levels is a good thing when you’re holding the stock, it is not a good thing if you’re looking to enter it.
If you’re wanting to add Corning to your portfolio, you can wait for a pullback and set your buy limit order at 23%, 38% and 50% Fibonacci retracement levels.
4. Ciena (CIEN)
The last one on the list of best 5G stocks to buy in the equipment and infrastructure category is small but steadily growing, Ciena. A company that offers fiber optic equipment and design services to communication companies.
Ciena used the ramp-up to 5G to pay down debt and increase its cash reserves. As organizations update their systems to handle 5G, this small firm enjoys a prime opportunity to offer both the engineering and the material needed.
It is a small-cap company with just $8.9 billion in market cap, and the stock doesn’t pay any dividends. So if you’re interested in fixed dividend income, this might not be the perfect fit.
The growth opportunity for the company lies in the growing network traffic and demand for bandwidth. Ciena also has meaningful drivers, including share gains in markets like carrier transport and webscale, and the WaveLogic 5 DSP.
While the growth opportunity is there, issues with installation delays and capital expenditure uncertainty will likely sap some of Ciena’s revenue momentum. Covid 19 can also tap breaks on data center growth in 2021.
On the charts, CIEN saw a major correction in August of 2020, falling nearly 35% from its high in a few weeks. Since then, the stock couldn’t reach back the previous high and now started falling again after touching 78% retracement level.
Some good buying levels, according to Fibonacci retracement, comes at $47, $44 and $42. And you can book profits once it reaches back its previous high of around $61.