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Did you know that 5G is 100 times faster than the previous standard 4G? 5G is the fifth and the newest generation wireless networking technology with the fastest download speeds and lower latency.
But along with all the promises and benefits that 5G offers, it has also brought about a ton of rumors, conspiracy theories, and concerns regarding its safety for birds, animals and even humans.
Leaving the conspiracy theories aside, many experts claim that 5G will have an impact on all aspects of our life, changing the way we work, live and play. If 5G is such big of a revolution, it must be a great investment opportunity as well.
The topic for today’s blog is the best 5G stocks to invest in. This blog is part 1 of 3 on best 5G stocks. Today, we’ll be looking at three different categories involved with the 5G technology, namely semiconductors, equipment & infrastructure, and real estate.
Then within each of these three categories, we’ll discuss the best 5G stocks that you can consider investing in, and analyze each one of them from a fundamental, technical, and sentimental point of view to see how it fits within your portfolio.
5G Companies by Category
5G companies can be broken down into semiconductor manufacturers, also known as chip makers, manufacturers of basic equipment and infrastructure that is required to deploy the 5G technology, and holders of real estate assets.
Today, we’re going to discuss the semiconductor category and let you know about the best 5G stocks under this category that you can invest in.
But before that, we first need to get today’s geek word out of the way because a lot of these companies are involved with this, especially the next one we’re going to analyze.
Field programmable gate arrays (FPGA) is basically a hardware circuit that a user can program to carry out one or more logical operations. So with that out of the way, let’s get into the 6 best 5G stocks in the semiconductor category.
1. Xilinx (XLNX)
Xilinx is the leader in FPGA market share, and its chips are critical in the performance of a lot of devices in the communication, data processing, industrial, consumer and automated markets.
Its market cap stands at $29.4 billion. The stock pays a dividend of 1.65% yield, and its next earnings is coming up on 28th April 2021.
From a fundamental point of view, the strong points of the company are: FPGAs have taken and are poised to continue to take market share away from ASICs (Application-specific integrated circuit)
As FPGAs shrink in size and rely on smaller transistor sizes, they may become more suitable for a wide array of applications, thus providing Xilinx with future non-traditional growth opportunities.
Now, on the negative side, Intel has acquired Xilinx’s rival Altera, providing them with substantial resources, which could allow Altera to close the performance gap with Xilinx in the future.
Xilinx’s revenue growth has also been lumpy, despite the fact that FPGAs are expected to grow at a faster pace than the broader chip industry.
The market sentiment for Xilinx is currently neutral, with investors neither bullish nor bearish on the stock.
Looking at the technical chart, the stock was rallying right from the March low until January 2021, but it has now entered the correction phase and has broken below the Ichimoku cloud.
The stock is currently trading at 50% Fibonacci retracement levels of $111 and can reverse from there. You can place your buy limit order on $111, $100, and $86 if the bear run continues.
2. Qualcomm (QCOM)
The next company in the semiconductor category is Qualcomm. It develops and licenses wireless technology and also designs chips for smartphones. Qualcomm has ridden the smartphone boom since the early 2000s focusing on the tech behind the first 3G and 4G mobile networks.
It has a $147.3 billion market cap and pays a dividend yield of a decent 2.92%. The next earnings are coming up on 28th April 2021, so you can keep an eye on it.
Some strong things about Qualcomm are its strong portfolio, including chips that enable 5G communication in everything from IoT devices to cars and other industrial equipment, and its strong balance with a ton of cash to drive further hardware innovations and growth.
On the flip side, some worrying things about Qualcomm’s chip business are the challenges it faces from the loss of share in Samsung and Apple phones and the regulatory scrutiny that its licensing business is facing in the US, Taiwan and South Korea.
Taking a look at the QCOM price chart, it is quite similar to that of XLNX because it was also in an uptrend till the last month but has corrected a lot from its all-time high.
It has also broken below the Ichimoku cloud confirming its clear bearish trend. The stock is currently at 38% retracement levels and showing no signs of reversal at the time of writing.
If you don’t have any shares of QCOM and want to get your portfolio exposed to it, you can consider placing your buy limit orders at $126, $113, and $100.
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3. Nvidia (NVDA)
Nvidia’s graphic processing units (GPU) are best known for high-end video games, but they’ve found uses in many other applications, including 5G.
5G networks promise not only faster download speed but also the ability to handle higher traffic and intelligently route network signals where they’re needed the most.
GPU-hungry video games, especially cloud-based games that are streamed over a network, could be the biggest beneficiaries of 5G, which can be a potential growth area for Nvidia.
Nvidia has a huge market cap of $309 billion but pays a tiny dividend yield of 0.17%. The next earnings report will be out on May 13, 2021.
The positive points of the company include the massive growth opportunity it has in artificial intelligence and deep learning, where its graphic chips can be used, and it also has a first-mover advantage in the autonomous driving market.
There are not many negative points about Nvidia, but still, its automotive endeavors face a lot of competition, and the majority of its revenue comes from the maturing PC industry via PC gaming.
The stock was booming for nearly the whole of 2020 but is now consolidating between the $500-$600 price range for the past few months.
If the sentiment turns bearish, you can expect $428 and $370 levels, which will also be considered a good buying opportunity.
4. Skyworks Solutions (SWKS)
Now we’re getting into smaller companies in the best 5G stocks in the semiconductor category, and one of the most famous ones is Skyworks Solutions.
SWKS is a key smartphone and consumer electronics supplier, and the company has used its connectivity know-how to enter other markets such as smart home devices and connected industrial equipment. It has also developed some of the basic components that power the next generation 5G network.
The plus point with the company is its healthy balance sheet and its specialty in radio frequency (RF) chips that might help them find clients in new industries.
Some not-so-good points are its significant customer concentration with Apple and excessive pricing power in the hands of big clients like Samsung and Apple.
Similar to other stocks on the list, SWKS was also in a major uptrend from March 2020 but is now in the consolidation phase. It looks like there is some pullback that is pending, so you can consider adding the stock after a pullback.
5. Qorvo (QRVO)
Qorvo is a leader in radio frequency chips that they sell to smartphone makers and infrastructure & defense customers.
It is much smaller than its peer Skyworks Solutions with only $12.6 billion in market cap, and understandably, doesn’t pay a dividend to reinvest maximum money back into the business.
As wireless technology shifts to more advanced 5G networks, smartphones will require greater RF content per device, which should provide a nice runway for further growth at Qorvo.
But again, like Skyworks, Qorvo has significant customer concentration with Apple, and it would be a damaging blow if Apple were ever to switch to another vendor or suffer a slowdown in iPhone sales.
Talking about the technicals, Qorvo doesn’t have a ton of data on the stock market as it IPOed recently back in 2015.
The good news is, even though it’s a relatively new company, it has generally gone up and is already above the IPO price, which is a big deal for tech stocks.
Since the start of 2021, the stock is consolidating between the range of $160-$180. If the bullish moment slows down, then there are chances that it can dip to $145 and $130 levels, which would be some good buying levels.
6. Cree, Inc. (CREE)
The last one on the list of best 5G stocks in the semiconductor category is Cree, Inc. with the least market cap of all of its peers on the list at just $6.4 billion.
It is involved in the manufacturing of wide bandgap semiconductor products for power and radio frequency (RF) applications.
Cree is readying up for long-term growth and has a bright future as it is a market leader in silicon carbide products, and its business has been gaining traction in next-generation technologies like EV and 5G.
But while Cree has a bold vision, it has weak financials and a steep price, which are some unfavorable points for investors.
Since listing, CREE was trading in a range going up and down, but in November last year, it gave a major breakout shooting up more than 70%.
Currently, a correction is going on in the stock and the price has already slipped more than 20% from the all-time highs in the last few months.
Some good buying levels, if the correction continues, comes at $105 and $90. So if you’d like to have CREE in your portfolio, consider placing buy limit orders at these levels.