The Success of 5G Services Has Share Traders Striving for More
Investors and blue chip technology companies are aggressively investing in 5G technology as Grand View Research data shows the global 5G services market could hit $41.5 billion this year, with further analysis showing a 43.9% annual compound growth rate between 2021 and 2027. These bullish forecasts have been providing significant support to share prices of tech companies that are working on 5G technology.
The introduction of 5G supported products will bring with it the next digital revolution. Telco providers in both developed and developing countries around the world have already begun their plans for switching cellular networks from 4G to 5G. 5G would enhance the speeds to several gigabits per second, which is about 50x faster than 4G.
South Korea and China are ahead of the U.S. in 5G wireless deployment, while Europe is still far behind. From the investor’s point of view, investing in companies that are offering 5G technology-related products and services is one of the best ways of generating positive returns from the world’s shift towards 5G technology.
In this guide, we will help you identify the best 5G stocks that are likely to generate big returns for investors in the coming years. In addition to this, we will also help you in understanding how to buy 5G stocks.
Top Six 5G Stocks to Buy in 2020
Apple is the world’s largest technology company, when taking into consideration their market capitalisation of over US$2.14 trillion. Although its plan of launching 5G supported smartphones and other products was delayed due to the coronavirus pandemic, the company is working aggressively hard to introduce its 5G supported smartphones during the final quarter this year. $AAPL soared sharply since the beginning of this year, due to the potential launch of 5G supported iPhone 12. Its shares are up 70% since the beginning of this year, accelerating the twelve-month gains to 143%. Despite the recent rally, market analysts have raised their stock price targets for Apple ahead of their 5G supported product launch. Wedbush has lifted Apple stock price target to US$600, with a bull case price target of US$700. Its shares are currently hovering around US$500.
Analyst Daniel Ives said, “Apple is our favourite name to play the 5G theme through the upcoming iPhone 12 lineup and strongly believes a further re-rating of the stock is ahead.” “Apple has a “once in a decade” opportunity with the 5G iPhones over the next 12-18 months. The firm thinks about 350M of the 950M iPhones globally are in the upgrade window,” Ives added.
$QCOM is among the world’s largest chip makers for smartphones and other tech products. Its portfolio includes Snapdragon SoCs bundle, GPU, and baseband modem along with a massive portfolio of wireless licenses. Although Qualcomm’s stock price struggled this year due to disputes with Apple and Huawei, its stocks regained momentum in the past three months as the chipmaker has resolved disputes with big tech companies. Qualcomm’s stock price rose 30% so far this year, extending the twelve-month gains to 60%. Qualcomm is one of the best 5G stocks to buy, as analysts are expecting massive revenue growth from its leading position in 5G. Bank of America analyst, Tal Liani, claims that Qualcomm is in a position to generate revenue in the range of $5 billion to $10 billion from its 5G and mmWave connectivity solutions next year. The revenue growth forecast accounts for 18% to 36% of overall revenue, which would also help in diversifying its revenue base away from its aging 3G/4G chips.
Nvidia is one of the best 5G stocks to buy. Its share price grew 114% since the beginning of this year and shares are up more than 200% in the past twelve months. Nvidia is the biggest provider of data centre processors for cloud and A1 products, while 5G networks are likely to be the future of edge computing; an evolution of cloud computing. The market analysts say the 5G revolution would be a big opportunity for Nvidia and other chipmakers. Nvidia stock price is currently trading around the highest level in history. The market analysts are expecting a further upside in the days to come. Nadeem has provided a price target of US$600. “Our new PT is 49x our CY22 (FY23) EPS estimate of $12 plus net cash of $6/share. With long-term revenue growth of 20%+, a gross margin approaching 68-70%, and an operating margin of 43-46%, we believe this multiple is well justified,” Nadeem analyst Rajvindra Gill said.
Verzion Communications Inc. claims that they have launched the first end-to-end fully-virtualized 5G data session. “Virtualizing the entire network from the core to the edge has been a massive, multi-year redesign effort of our network architecture that simplifies and modernizes our entire network,” says Verizon’s Adam Koeppe. $VZ is working hard to be a leader in the US 5G wireless providers to end-users. Verizon is also the first operator to complete 5G global roaming trials in South Africa. Verizon also offers dividends to investors. Its dividend yield currently stands around 4.41%. The company has raised quarterly dividends in the past thirteen consecutive years. Its shares are currently trading around USD$60.
Broadcom Inc. one of the best 5G stocks to buy as its businesses are likely to see strong demand from secular developments like 5G growth/deployment. Recently, Nokia announced a partnership with Broadcom for the development of chips for its 5G equipment. $AVGO stock price soared only 7% since the beginning of this year, up 22% in the last twelve months. Market analysts believe Broadcom stock price is undervalued at the current level. Shares of chipmakers are currently trading around US$350. Credit Suisse has set a price target of US$400.
$NOK one of the oldest mobile phone makers and it has also been actively working on offering 5G supported smartphones to its users. It has recently completed its first calls on a live 5G stand-alone network. It also announced a partnership with Qualcomm for 5G chips. The company has reported quarterly revenue of 5 billion euros in the latest quarter.
“Our continued momentum was demonstrated by the progress we announced after the quarter ended. These included the availability of a software upgrade that allows millions of Nokia 4G/LTE radios deployed to more than 350 customers to be migrated seamlessly to 5G; and plans to accelerate leadership in Open RAN. Nokia is the only global supplier fully committed to O-RAN with commercial 5G Cloud-RAN networks. We also announced an expansion of our IP routing business into the data centre market and highlighted that Apple was deploying our technology at its data centers,” the CEO said.
What to Look for When Buying 5G Stocks?
Several big and small players have been ramping their 5G deployment, in order to shift their products from 4G to 5G. However, the investors are always suggested to take a closer look at each company and its fundamentals before investing in 5G stocks. Below are some key factors that you need to consider when buying 5G stocks:
- Proof of Concept: It’s important to know what type of 5G product or application the company is offering. Some companies are offering 5G wireless solutions, while others are providing 5G chips, smartphones, and other applications.
- Revenue diversification: The revenue diversification is key when you are selecting stocks for investment. You need to check all the revenue sources, as revenue diversification lowers dependence on any particular product.
- Valuations: Investing in 5G stocks that are significantly overvalued is not the right way of investing. Analysts suggest to invest in companies that are trading at a discount with strong future fundamentals.
How to Buy 5G Stocks?
Once you decide to buy a 5G stock and you have selected the company, you need to search for a broker. You cannot directly invest in a company. You need to buy shares of that company through brokerage. Brokers charge fees and commissions for their services. Therefore, the broker’s selection of shares to trade play a key role in overall returns. In addition to buying these stocks physically through a stock exchange, you can also trade on price movements of these stocks through leveraged trading (without owning the underlying asset itself); this is achieved by entering into a contract for difference (CFD) trade.
Below are the top 5G brokers that permit you to buy these 5G stocks physically and also trade these stocks as CFDs.
Admiral Markets offers leading online trading services and gathers several regulated companies situated in different places around The World. Admiral Markets offers the possibility to trade over 8,000 instruments, including Forex and CFDs on stocks, commodities, indices, bonds, ETFs and cryptocurrencies. Trading CFDs on stocks with Admiral Markets is highly competitive, with commissions of 1 EUR on EUR-denominated stocks, 1 USD on USD-denominated stocks, and 1 CHF on CHF-denominated stocks, etc. Trading physical stocks and ETFs on various stock exchanges have a different scheme of commissions than the CFDs, but both options support the same instruments. Like the majority of Forex brokers, Admiral charges swaps – overnight fees/rollover fees for Forex and CFDs at the end of the day. With Admiral, you will have an inactivity fee of 10 EUR per month.
- Global Presence
- Regulated by Prominent Authorities
- Extensive Industry Experience (18 years)
- A small selection of FX pairs
- Does not provide services in the US
- No daily market analysis
Open an account with Admiral Markets.
What was initially launched as a regular Forex broker, eToro became the world renowned Fintech mammoth. Their main ambition is to facilitate everyone’s access to trading from anywhere and everywhere. eToro offers the possibility to trade cryptocurrencies, stocks, commodities, Forex, indices and ETFs on leverage.
- Zero commission for trading stocks
- Licensed by reputable authorities like FCA, ASIC, CySEC, FinCEN and MiFID II compliant
- High end facilities for investors that trade large amounts of money via eToro Club
- High spreads
- Withdrawal fees and conversion fees
- Limited customer support
Open and account with eToro.
One of the oldest brokers in the trading industry is City Index. Today, City Index is part of a powerful financial group listed on the New York Stock Exchange, GAIN Capital Holdings, Inc. (NYSE: GCAP). Their mission is to be a “stable partner invested in your success“, offering investors a wide selection of over 12,000 financial instruments, spanning across Forex, indices, shares and cryptocurrencies. When trading equities, a commission fee is applied and not a spread. Commission fees start from 0.08% (€10 minimum) for EU and UK shares, 1.8CPS ($10 minimum) for US markets and 20% margin is required for each trade.
- Licensed by eight prominent authorities, including FCA, ASIC, MAS, UAE
- Veteran of the industry with 37 years of experience
- Competitive spreads and commissions
- Powerful collection of research and analytics tools, such as Trader Central, Reuters news feed, market intelligence
- Does not serve clients in the US
- Limited number of payment options
- No social trading
Open an account with City Index here.
Experiencing exponential growth in the last few years, FXTM has now established themselves as a reputable broker with offices spread across four continents. They attribute their success towards the fact that “[they] prioritise [their] clients’ needs above anything else”. FXTM proposes a suite of over 250 trading assets comprised of CFDs on Forex, commodities, indices and stocks. The Stock CFDs account type offers the following characteristics: instant execution, trading instruments available: 120+ US shares and 40+ European shares, no commissions, leverage fixed per asset (3:1 for European Stocks and 5:1 for US Stocks), minimum deposit requirement of $/€/£ 100, available currencies EUR, USD, GBP, among others.
- Special features: MT4 Forex Trading Indicators, FXTM Trading Signals, FXTM Pivot Points Strategy
- Zero commissions on share CFD trading
- Licensed by prominent authorities as FCA, CySEC, FSCA, FSC Mauritius and MiFID II compliant
- Withdrawal fees apply
- Does not provide services in US
- A small collection of trading assets
Open an account with FXTM.
TD Ameritrade is one of the most popular brokers for stockbroking. They do not charge any commission for trading shares. In addition to this, users can also take advantage of educational material and research resources free of cost. The platform offers various tools and features to help you in identifying the best buying opportunity. It has 300 branches around the world.
- High-level educational offerings
- In-person education is available
- On-demand content
- Strong mobile apps for users
- Some investors may have to use multiple platforms to utilise preferred tools
E-TRADE is among the famous stockbrokers that have set $0 commission on stock trading. Its user-friendly platform along with trading tools makes it easier for investors to capitalise on market movements. It’s charting feature, long product portfolio and strong customer support makes it a good choice for new and advanced investors. Morgan Stanley has recently bought E-Trade for $13 billion, the platform is still accepting clients and working according to its previous policies. The platform is available on both mobile and desktop.
- No commission
- No hidden fee
- Strong customer support
- Low minimum deposit requirement
- No currency trading
Firstrade also offers $0 commission on stock trading, with a low minimum investment requirement. The platform’s user-friendly nature and technologically enriched interface make it a strong choice for both new and advanced investors. It also offers educational material and extensive charting features. Easy deposit and withdrawal methods are among the best features of Firstrade. It’s a registered and licensed platform. It offers three different trading software on its platform. The trading platform is available on both web and mobile.
- Free stock, ETF, fund, and options trading
- Solid research tools
- Quality educational tools
- No credit/debit cards and electronic wallets for money transfer
- You can trade only on US markets
- No live chat and 24/7 availability
Established in 1946, Fidelity is a US stockbroker with regulation by top-tier authorities including the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). On the back of its compliance with regulatory authorities, Fidelity is considered a safe stockbroker. It accepts clients from the United States and a number of various other. The platform does not charge any account opening or deposit fee. Withdrawals are also free. Along with stocks, you can also trade currencies and other securities.
- Excellent trade executions
- Strong research resources and customisable asset screeners
- A broad range of stocks
- Lack of trading tools
- Some non-U.S. citizens cannot open an account
- Need to refresh the data every time
It is a top-rated broker with a strong reputation. The broker is working according to regulators’ guidelines. It does not charge any commission of stock trading. Its interface is user-friendly and the platform permits investors to trade several top-rated 5G stocks.The low minimum deposit requirement permits small traders to use this platform for stock trading.
- No fee on stock and ETF trading
- Exceptional research material
- Strong customer service
- Low educational material
- High fees for some mutual funds
- Only for the US market
Investing in 5G stocks appears like a good investment strategy because of the substantial demand for the high-speed tech revolution. Countries all over the world are shifting from 4G to 5G, which has been forcing tech companies to invest heavily in 5G products. 5G stocks have performed significantly well during the coronavirus pandemic and investors believe these stocks are likely to outperform broader market trends in the coming years.
Frequently Asked Questions
Who Is Leading 5G Technology?
China and South Korea are leading in 5G technology. The United States has started deploying 5G technology while Europe is well behind compared to China and the United States.The Chinese company Huawei is leading with 5G portfolio, while South Korean Samsung and LG are also leading on the 5G front.
Is It Good to Buy 5G Stocks?
Tech companies, particularly 5G companies are outperforming industrial and financial stocks since the beginning of this year. Therefore, it’s wise to invest in 5G stocks.
How Is 5G Different From 4G?
5G has significantly faster transfer speeds than 4G. It promises mobile data speeds that far outstrip the fastest home broadband network currently available to consumers.