Top 5G Tech Stocks to Watch in 2020
5G stocks are tech stocks that have a major financial stake in the futuristic 5G cellular network technology – the logical next step up from current 4G technology. 5G networks began rolling out around the world in 2019, though there is still a lot of work to do for their infrastructure.
Because of this, you can certainly expect some major growth in the 5G tech sector moving forward. Experts expect the global 5G technology market size to be $5.53 billion by the end of this year, and $667.90 billion by 2026. That’s a compound annual growth rate (CAGR) of 122% in that timespan.
Now, that is some major growth, and as a result, you might be interested in some of the top 5G tech stocks to watch this year.
In today’s article, we’ll cover some of the top 5G stocks you’ll want to keep an eye on. But first, let’s look a bit deeper into the 5G technology industry.
What Is 5G Technology?
You may be interested in 5G tech stocks, but you may not know exactly what 5G is. Quite simply, 5G technology is the fifth generation (hence 5G) of cellular network technology.
Cellular network technology is a vast infrastructure that works to enable mobile devices worldwide. Currently, your wireless devices are most likely connected to the 4G LTE network. You’ve probably noticed “4G LTE” at the top of your phone display.
5G technology powers faster internet connections, lower latency and a greater number of total connected devices. It is also the technology that will help power industries like cloud computing, self-driving cars and the Internet of Things.
According to research from Qualcomm, the economic impact of 5G tech will be massive. For example, analysts expect to create up to…
- $13.12 trillion in global economic output
- 22.3 million new jobs
- And $2.1 trillion in GDP growth.
So as you can see, there’s great potential for massive growth in the 5G space. You could even say it’s going to be the next big thing.
But how can you take advantage of this coming boom, and profit from it? Let’s take a look at some 5G tech stocks to watch…
5G Tech Stocks to Watch
1. Verizon Communications (NYSE: VZ)
Our first 5G tech stock to watch is Verizon Communications. Verizon is one of the largest telecommunications companies in the world – and one of the most successful. Indeed, Verizon’s service powers my phone, and maybe yours too.
Verizon is one of the major players to have already rolled out 5G service.
And it isn’t resting on its laurels.
For example, Verizon plans to expand its 5G cell sites by 500% and roll out 5G service in 30 new cities by the end of this year.
As one of telecom’s most dominant players, Verizon is a great bet for massive 5G technology success, but that’s not the only reason to take heart.
Verizon’s stock is down on the year, but that doesn’t make it a bad investment – Verizon has seen steady net income growth from $13.3 billion to $19.3 billion over the last three years.
Verizon could benefit greatly from the boom in 5G technology in the next five years, and now might be the right time to get on board and invest.
2. Nokia (NYSE: NOK)
Our second 5G tech stock is Nokia. You may well remember Nokia’s big boxy cell phones in the early 2000s. You may also know them as the internet’s favorite “phone that never breaks.” I myself was a sort-of-proud owner of one during my time studying finance at Binghamton University.
However, today Nokia is one of the major players in equipment for the global 5G wireless infrastructure. And with the company shifting its revenue mix in the 5G direction moving forward, it’s a good bet that Nokia stands to profit greatly from the coming 5G boom.
Nokia’s stock price is an affordable $5 as of midday trading on August 14. And after bottoming out in mid-March as the COVID-19 panic took over, the stock has been on a steady upswing.
Year to date, the stock has gained about 34%, with a dividend yield of about 2.25%. And although the stock is approaching its 52-week high, cost-cutting measures and a smaller business footprint in China mean that continued stock price growth in the near term is somewhat likely.
And even though Nokia earned only $8 million in net income last year, the company’s losses shrank in each of the previous three years. Clearly, Nokia has been on an upswing, and this is likely to continue as long as it keeps investing in its 5G technology operations.
3. Qualcomm (Nasdaq: QCOM)
Qualcomm is a major player in the semiconductor industry, which by itself helps to make the company a 5G tech stock to watch. But it does offer more than that.
Qualcomm is also in the business of licensing and collecting royalties on 5G wireless devices and infrastructure. The combination of these two distinct businesses – semiconductors and licenses – positions Qualcomm to profit handsomely from the coming 5G tech boom.
Qualcomm is currently trading around $113 – a record high for the company, which was trading at only $58 in mid-March when coronavirus hit. That said, as long as the company keeps producing in the 5G space, the stock should continue to do very well.
The stock also boasts a dividend yield of 2.28%. However, it also has a high price-to-earnings (P/E) ratio of 48.10. While that can make sense in a booming, growing company, it’s still something you’ll want to keep an eye on.
Although the company took a loss in 2018, in 2019 its net income was back up to $4.4 billion for earnings per share (EPS) of $3.60 (fully diluted).
Concluding Thoughts on 5G Tech Stocks
Cell phones are ubiquitous in today’s society. We rely on them for any number of necessary functions. 5G technology is going to be another major leap forward for this industry, which means that any company investing in 5G tech has the potential to be rewarded for it.
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5G tech stocks cover a range of businesses, from infrastructure to phone networks to semiconductors to product licensing. There are many different ways to profit. And now you know some of the companies that are definitely worth watching.
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.