The continuing digital transformation of almost all industries and heightened demand for efficient cloud-based services have been boosting demand for 5G technology. With the increasing demand for higher bandwidth, lower latency, quicker download speed, and network slicing, 5G technology is gaining importance.
The global 5G technology market is expected to grow at an 82.4% CAGR to$248.46 billion by 2028. The increasing demand for improved network performance and reliability should drive the growth of the 5G technology market. Fifth generation technology is expected to play a key role worldwide in creating smart cities.
Therefore, we think fundamentally sound 5G stocks Qualcomm Incorporated (QCOM), Nokia Corporation (NOK), Qorvo, Inc. (QRVO), and Ciena Corporation (CIEN) could be ideal bets now.
Click here to checkout our 5G Industry Report for 2021
Qualcomm Incorporated (QCOM)
QCOM, in San Diego, Calif., is a multinational semiconductor and telecommunications equipment company that develops and delivers products and services based on code-division multiple access (CDMA) technology used in digital wireless communications equipment and satellite ground stations.
On October 5, 2021, QCOM, together with ecosystem leaders spanning key platforms and OEMs, collaborated with Microsoft Corporation (MSFT) to redefine wireless expectations for latency-sensitive gaming, productivity, and learning applications on Windows 11 PCs with Qualcomm FastConnect systems. Also, QCOM and SSW Partners, a New York-based investment partnership, reached a definitive agreement to acquire Veoneer, Inc. (VNE) in a $4.5 billion, all-cash transaction. Having already demonstrated a successful collaboration with VNE’s Arriver business, integrating Arriver’s assets should accelerate QCOM’s ability to deliver a leading and horizontal ADAS solution as part of its digital chassis platform.
For its fiscal third quarter, ended June 27, 2021, QCOM’s non-GAAP revenue increased 63.5% year-over-year to $8 billion. The company’s non-GAAP operating income has been reported at $2.67 billion, representing a 117.9% year-over-year improvement. QCOM’s non-GAAP net income came in at $2.20 billion, up 124% from the prior-year period. Its non-GAAP EPS increased 123.3% year-over-year to $1.92. The company had $7.40 billion in cash and cash equivalents as of June 27, 2021.
QCOM’s EPS is estimated to rise 97.1% year-over-year to $31.85 in the current year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $33.01 billion for the current year, representing a 52.5% rise year-over-year. The stock’s EPS is expected to grow at a 32.2% rate per annum over the next five years. Over the past year, the stock has gained 3.5% in price and closed yesterday’s trading session at $133.05.
QCOM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value, Sentiment, and Quality. Click here to see the additional ratings for QCOM’s Growth, Momentum, and Stability. Of the 98 stocks in the B-rated Semiconductor & Wireless Chip industry, QCOM is ranked #12.
Click here to checkout our Semiconductor Industry Report for 2021
Nokia Corporation (NOK)
NOK is a Finland-based company engaged in the network and Internet protocol (IP) infrastructure, software, and related services market. The company operates through four segments: Mobile Networks; Global Services; Fixed Networks; and IP/Optical Networks. NOK serves communications service providers, governments, large enterprises, and consumers.
On October 22, 2021, NOK deployed its 5G standalone core network for Taiwan Mobile Co., thus enabling it to provide the most advanced 5G applications for enterprises and businesses and strengthen its network services and performance by offering ultra-low latency and reliability. As the sole supplier of Taiwan Mobile’s 5G network, NOK will support Taiwan Mobile’s ‘Super 5G strategy’ which is focused on sustainability and digital transformation. On October 20, 2021, Swiss-based telecom provider Sunrise UPC Communications AG deployed NOK’s Digital Operations software to modernize and consolidate its Operations Support Systems (OSS). By providing an Open API catalog-driven fulfillment solution that eliminates silo-based network management, Sunrise UPC will be able to develop new IoT and 5G-era services, like network slicing. For its fiscal second quarter, ended June 30, 2021, NOK’s net sales increased 4.3% year-over-year to €5.31 billion ($6.21 billion). The company’s gross profit has been reported at €2.18 billion ($2.55 billion), up 12.2% from the prior-year period. Its operating profit came in at €484 million ($565.55 billion) for the quarter, representing a 184.7% rise from the prior-year period. NOK’s net profit has been reported at €351 million ($410.14 million), up 254.5% from the prior-year period. Its EPS increased 200% year-over-year to €0.06 ($0.07). As of June 30, 2021, the company had €7.25 billion ($8.47 billion) in cash and cash equivalents.
The consensus EPS estimate is expected to improve 27.6% year-over-year to $0.37 in the current year. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect NOK’s revenue to be $26.10 billion for the current year, representing a 4.7% rise from the prior-year period. NOK’s EPS is expected to grow at a 17.8% rate per annum over the next five years. Over the past year, the stock has gained 39% in price and closed yesterday’s trading session at $5.95.
It’s no surprise that NOK has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Sentiment, and a B grade for Value. Click here to see the additional ratings for NOK (Growth, Stability, Momentum, and Quality). NOK is ranked #17 of 55 stocks in the B-rated Technology - Communication/Networking industry.
Qorvo, Inc. (QRVO)
QRVO in Greensboro, N.C., develops and commercializes technologies, products, and radio frequency (RF) solutions for mobile, infrastructure, and aerospace/defense applications worldwide. The company operates through mobile product and infrastructure & defense products segments. Its products are used in wireless and broadband infrastructure, defense, industrial, automotive, and Internet of Things.
On October 15, 2021, QRVO entered a channel agreement with TCT Brasil, a distributor of semiconductors and electronic components, to support QRVO’s Infrastructure and Defense products in Brazil. TST’s dynamic management, global logistics, and comprehensive product portfolio, updated for key technological trends, should expand QRVO’s presence and go-to-market strategy in Brazil.
On September 21, 2021, QRVO introduced two new QPQ3500, and QPQ3501 bulk acoustic wave (BAW) filters to support the ongoing global deployment of 5G base stations. These acoustic filters offer base station OEMs pin-compatible, 5G filter solutions that deliver lower insertion loss and superior out-of-band rejection than similar products and support the growing global demand for higher frequency and greater bandwidth. This breakthrough should replace the larger, more expensive filters currently being used and witness great demand in the future.
For its fiscal second quarter, ended July 3, 2021, QRVO’s revenues increased 41% year-over-year to $1.11 billion. The company’s non-GAAP gross profit came in at $582.65 million, indicating a 52.3% year-over-year improvement. Its non-GAAP operating income was $367.03 million, up 80.1% from the prior-year period. While its non-GAAP net income increased 84.3% year-over-year to $322.63 million, its non-GAAP EPS increased 88.7% to $2.83. The company had $1.20 billion in cash and cash equivalents and restricted cash as of July 3, 2021.
Analysts expect the stock’s EPS to improve 24.4% year-over-year in the current year to $12.12. It surpassed the consensus EPS estimates in each of the trailing four quarters. The 4.74 billion consensus revenue estimate for the current year indicates an 18.2% year-over-year improvement. QRVO’s EPS is expected to grow at a 15.4% rate per annum over the next five years. QRVO has gained 25.9% in price over the past year and ended yesterday’s trading session at $170.26.
QRVO’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Quality, and a B grade for Growth. Click here to see the additional ratings for QRVO’s Sentiment, Momentum, Value, and Stability. QRVO is ranked #16 in the Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2021
Ciena Corporation (CIEN)
CIEN provides network hardware, software, and services that support the transport, routing, switching, aggregation, service delivery, and management of video, data, and voice traffic on communications networks worldwide. The Hanover, Md., company sells its products through direct and indirect sales channels to network operators.
On October 20, 2021, Peraton Inc., a communications and information research and engineering company, announced the commercial deployment of wavelength services based on 800G technology using CIEN’s Waveserver 5 platform. This provides efficient network utilization, lower latency, and enhanced service reliability to improve overall network performance and end-user experiences. CIEN is looking forward to a long-term partnership with Peraton.
On October 12, 2021, Telesat, one of the world’s largest and most innovative satellite operators, announced the deployment of CIEN’s routing and switching platforms for its Telesat Lightspeed terrestrial backhaul network. Telesat will use CIEN’s 3926 and 5170 platforms to provide agile, assured MEF-compliant services at its points of presence (PoPs), as well as terrestrial connectivity to as many as 50 Earth-based landing stations. CIEN is witnessing widespread recognition of its products across the industry.
CIEN’s non-GAAP revenue came in at $988.10 million for its fiscal third quarter, ended July 31, 2021, representing a 1.2% improvement year-over-year. The company’s adjusted gross profit came in at $479.62 million, up 1.9% from the prior-year period. As of July 31, 2021, CIEN had $1.23 million in cash and cash equivalents.
A $3.61 billion consensus revenue estimate for the current quarter represents a 2.1% rise year-over-year. The stock surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock is expected to grow at a 7.8% rate per annum over the next five years. CIEN has rallied 30.4% in price over the past year and ended yesterday’s trading session at $53.46.
CIEN’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary rating system.
CIEN has a B grade for Value. In addition to the POWR Ratings grades we’ve just highlighted, one can see CIEN’s ratings for Quality, Sentiment, Momentum, Stability, and Growth here. CIEN is ranked #15 in the Technology - Communication/Networking industry.
Click here to checkout our 5G Industry Report for 2021
QCOM shares were trading at $131.62 per share on Friday afternoon, down $1.43 (-1.07%). Year-to-date, QCOM has declined -12.34%, versus a 22.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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