Unless you’ve been living under a rock for the last year or so, you’ve undoubtedly heard about the new 5G cellular networks soon to be popping up all over the country. So, what exactly is 5G and what is all the fuss about? 5G stands for fifth generation cellular wireless and, in the near future, it will become the standard for mobile telecommunications. 5G uses a higher frequency band of the wireless spectrum that allows data to be transferred more quickly than current 4G technology. Although 5G data transfer speeds have been a point of controversy, most industry experts agree that 5G technology will revolutionize the way we share data. The new 5G networks will not only benefit consumers, but also several companies. Look, 5G is a big deal. As an investor, how can you take advantage? Here are my top three stocks that could help you benefit from the 5G revolution.
The implementation of 5G networks will greatly benefit semiconductor companies. The new 5G networks will run on a totally new frequency. This means every phone and wireless device will need new chips to be compatible with 5G networks. A semiconductor company that is poised to take advantage of this need for 5G chips is Xilinix (XLNX). Xilinix is a leading producer of field-programmable gate array (FPGA) chips. These types of chips are used in the early stages of hardware upgrade cycles due to their flexibility for changes.
Not only is Xilinix a top producer of FPGA chips, it is a leading manufacturer of all types of 5G-related infrastructure. Xilinix is already profiting from the deployment of 5G networks. The company recently reported terrific growth in the last half of 2018 and revenue in Xilinx’s communications business shot up a whopping 74% last quarter thanks to 5G deployments. Despite reporting a better than expected quarter, a couple of analysts downgraded Xilinix, which caused the stock price to plummet. This may have created the perfect buying opportunity. Now could be the perfect time to add this stock to your portfolio.
You may be familiar with Nokia (NOK) and may be surprised that they’re still around. The advent of the smartphone shoved this former producer of seemingly indestructible phones out of the limelight. In 2007, Nokia controlled over 50% of the cell phone market. Today it controls less than 1%. However, billions of dollars could be set to flow into this company, thanks to 5G. Currently, Nokia is one of the world’s only makers of 5G equipment and infrastructure. To get 5G networks up and operational, phone companies will need what Nokia offers.
Just a few months ago, Nokia signed a $3.5 billion multi-year contract with T-Mobile. In the deal, Nokia will be T-Mobile’s sole provider of 5G technology. In Nokia’s latest earnings report, the company’s network equipment sales shot above $6 billion for the first time in half a decade. It’s obvious that Nokia will be a big winner in the 5G roll-out, and with a stock price currently under $6/share, it’s a great stock for investors with smaller accounts. In my opinion, NOK could be a high-reward opportunity.
This may be the safest 5G play out there. Verizon Communications (VZ) is not only an industry leader at the forefront of the 5G boom, it is also one of the best run companies in the United States. Verizon recently launched the first 5G networks in select cities, giving the company a distinct first-to-market advantage. The company has also given itself a big advantage by working with various city governments to secure 5G airway rights, ensuring that the company will remain an industry leader for years to come.
The problem with rolling out 5G networks is that, currently, there are not many smartphones that will work on a 5G network. Again, Verizon seems to be ahead of the game. Verizon has partnered with cellphone companies so they can offer 5G phones as Verizon’s 5G mobile networks become available. Investors in VZ stock not only enjoy less volatility, the company also pays a dividend yield of 4.1%. As the new 5G era begins, Verizon Communications could be the best long-term investment.
Without question, 5G will be a game-changer. For investors, the key is finding the companies that are making moves to benefit the most from 5G technology. The three stocks mentioned in this article have the potential to reward investors with great returns as 5G networks begin popping up around the country. Although this technology is still in its infancy, believe the hype. There is no time better than the present to add some 5G exposure to your portfolio.