Switching to 5G could fuel a rally in these 3 stocks
The world of technology is in upheaval. Since the end of 2017, new 5G wireless technology has advanced, bringing with it a combination of faster connection speeds and lower latency, and the promise of big changes in the way we connect to the online world. New technologies – connected automobiles and agile IoT spring to mind – would not be possible without 5G. Investment research firm HSBC Global, in a recent report on the advent of 5G technology, discusses the question of whether the new network is a boom or a bust. Specifically, HSBC asks why 5G has been disappointing – so far. Industry expert Professor William Webb notes that the rollout of 5G has not lived up to the hype, even in Asia where networks are larger and better integrated. He describes the technology as “evolutionary, not revolutionary”. Webb highlights several areas where 5G clearly needs evolution: expanding networks, which will require new construction of towers and cells; smoother transitions between cells; and improved functionality once the devices are connected. According to him, 5G is a beginning rather than an end Commenting on opinions of Webb and technology in general, Neale Anderson, head of telecommunications at HSBC, writes: “[We] deem unfortunate (although unfortunately inevitable) that 5G has been rushed to the market … The bar will be further raised by mmWave services, which have been launched in the United States, and recently in Asia in Japan. We see this as the ‘real’ 5G and expect it to open up – albeit slowly – new opportunities for operators. Whether 5G depreciates or overwhelms in the short term, in the longer term it’s here to stay – and that means some stocks will gain as 5G expands. Wall Street analysts have been busy finding these stocks, and the TipRanks database has the scoop. Here are three. Inseego Corporation (INSG) First, Inseego, is a mobile and wireless hotspot company. As you can imagine, the company has benefited directly from developments towards an increase in remote working and virtual offices. The stock is up 27% this year, even after accounting for high volatility in April and August. Inseego is directly concerned about 5G. As a wireless service provider, the company cannot afford to ignore new technology and is directly involved in the development and marketing of 5G routers for home use. Inseego has an ongoing partnership with Verizon on networking and hardware, and is also working to expand its hotspots for IoT uses. The company hasn’t ignored the guts of the devices and is working with Qualcomm on advanced 5G router chips. Like many network providers, Inseego has performed financially. Quarterly revenue posted sequential gains through 2020, with the third quarter surpassing $ 90 million at the peak. Third quarter EPS posted a loss of 6 cents; the loss was considered normal as Inseego, again like many other tech companies, typically posts a net loss per share. The important point for EPS was that this was the smallest such loss in two years. Analyst Lance Vitanza, in his coverage of the action for Cowen, writes: “As the company continues to see significant demand for legacy 4G products, its second- Generation 5G product suite continues to soar… Inseego is in a position to take advantage of the advent of 5G, a technology expected to generate $ 500 billion of GDP in the United States and which will give way to more traditional upgrades of existing mobile hotspots from 4G to 5G. ”Based on these comments, the analyst assigns an outperformance rating (that is, ie purchase) to action. Its price target, at $ 13.50, indicates a growth margin of 44% in 2021. (To look at Vitanza’s track record, click here) Overall, Inseego holds an analyst consensus moderate buy rating , on the basis of 6 opinions divided into 4 purchases and 2 Holds. Meanwhile, the average price target, $ 13.17, suggests it has a potential upside of 41% in the coming year. (See INSG stock market analysis on TipRanks) Amdocs Limited (DOX) Software company Amdocs has built a solid reputation in the communications and media niche, while remaining under the radar compared to its competitors. In recent months, Amdocs has expanded its business to 5G with the acquisition of Openet, a telecommunications service provider for network marketing and analytics. Openet is touting itself as “ built for 5G, ” and this acquisition, valued at $ 180 million, will lead Amdocs to move towards the 5G network. universe. The company’s revenue barely flickered during the corona crisis, hovering between $ 1.03 billion and $ 1.05 billion in the past four quarters. Income did even better; 3Q20’s $ 1.17 EPS is the company’s highest in more than two years. Despite the strong financial performance, Amdocs shares still haven’t fully recovered from the mid-winter stock market crash. The stock is down 10% year to date, JPM analyst Jackson Ader believes the relatively low price of this stock presents a clear opportunity for investors. “As 5G adoption begins to increase and North American revenues stabilize, we believe it is time to step into this value name that has significantly delayed our coverage and the market this year. .we believe 5G is supportive, improving cash flow conversion and a potential value turnover warrants an upgrade to overweight, ”Ader noted. Along with this upgrade to overweight (i.e. buy), Ader sets a one-year price target of $ 75, suggesting a 17% rise for the stock. (To view Ader’s track record, click here) Overall, with 3 recent buys and 1 hold, Amdocs is getting a strong buy rating from analyst consensus. The stock is selling for $ 63.97 and the average price target is $ 76, slightly more bullish than Ader’s and involving a rise of around 19%. (See Amdocs stock market analysis on TipRanks) Tower Semiconductor (TSEM) Last but not least is Tower Semiconductor, a manufacturing company in the chip industry. Fabs are a vital link in the semiconductor industry because many of the big chip designers don’t make their own products – they design, make prototypes, and outsource mass production. Tower is one of the serial producers, making chips for big names in big semiconductor companies including Broadcom, Intel and Samsung. Tower is heavily invested in 5G, producing a range of chips for 5G compatible devices , including everything from handsets to data. centers. As 5G networks grow and end users begin the process of switching to enabled devices, Tower is well positioned to win. No matter which big chip companies are taking the lion’s share of the new business, Tower will be there – running the manufacturing plants. It’s an enviable niche at a time when the market is starting to move at an accelerating pace. The combination of a solid foundation and a good outlook is reflected in the outlook for income and profits. On the top line, income has remained stable throughout this pandemic year, while in the end result, EPS is expected to start rebounding in the fourth quarter of this year. He rates the stock at a buy with a price target of $ 30, suggesting a 30% rise over the one year horizon. (To view Gill’s track record, click here) Supporting his position, Gill writes, “We anticipate robust growth in 21, given our expectations for the 5G smartphone market to double and RF content to increase from 40 to 60. % … [TSEM] as our best small-cap 5G game, because we believe it’s uniquely positioned to take advantage of the 5G cycle (both on the smartphone and infrastructure side). Overall, Tower’s Strong Buy analyst consensus rating is unanimous, supported by 3 recent buy comments. The stock has an average price target of $ 27.67, which implies a 20% rise against the current share price of $ 23.08. (See TSEM stock market analysis on TipRanks) “Best Stocks to Buy, a newly launched tool that brings together all information about TipRanks stocks. Notice of no -Responsibility: The opinions expressed in this article are solely those of the featured analysts. Important to do your own analysis before making any investment.