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In this article, we discuss the 12 best communication stocks to buy today. If you want to read about some more communication stocks to buy today, go directly to 5 Best Communication Stocks To Buy Today.
The communications industry has grown from a sector that used to include just telecommunications, newspapers, magazines, books, and radio and television broadcasting to one that also encompasses the world of internet and software-as-a-service providers. On a global level, it is one of the biggest and most stable businesses. Over the past year, the incredible rise in demand for higher-speed networks, partially as a result of more businesses going digital, has resulted in huge fiber and wireless deployments.
As a new year beckons, there is an emerging set of issues and opportunities presented by a dynamic regulatory, technological, and competitive environment that may influence progress in the communications space. Per a report by research firm Deloitte, the biggest trends shaping the telecommunications industry are more competitive broadband markets and cybersecurity in the 5G era. The Economist Intelligence Unit claims that artificial intelligence will continue to develop after several breakthroughs in the area too.
These growth trends are also reflected in governmental policies. For example, the United States government recently passed a $1 trillion infrastructure bill that has earmarked over $65 billion for the upgradation of broadband networks across the country, boosting communications stocks. The software side in the business is growing rapidly, some estimates place the annual growth of this sub-space in the communications sector at more than 6%. There is also spending on expanded options for high-quality communication and internet services.
The enterprise market for private cellular networks and edge computing is gaining momentum as well. The market is still nascent but promises to be competitive in near future. Network operators will have to compete against each other as well as new players, who may prove key partners in delivering future tech solutions. While the widespread adoption of 5G offers many benefits, it also creates new security concerns and challenges. The operators have taken steps to evaluate and minimize threats arising from 5G and software-centric networks.
Taking advantage of the situation, they are in a unique position to offer 5G security services to enterprises seeking to deploy their own advanced wireless networks. The challenges outlined can be overcome by reevaluating business models in terms of both service offerings and geographies. Companies can also look for ways to differentiate services on non-performance attributes. Some of the top firms in the sector include T-Mobile US, Inc. (NASDAQ:TMUS), Charter Communications, Inc. (NASDAQ:CHTR), and Alphabet Inc. (NASDAQ:GOOG).
Our Methodology
These communication stocks are extremely popular among the 920 elite hedge funds tracked by Insider Monkey. They also have strong analyst ratings from the Wall Street and have long-term growth potential.
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Best Communication Stocks To Buy Today
12. Chunghwa Telecom Co., Ltd. (NYSE:CHT)
Number of Hedge Fund Holders: 5
Chunghwa Telecom Co., Ltd (NYSE:CHT) provides telecommunication services in Taiwan and internationally. On November 1, Chunghwa Telecom posted earnings for the third quarter of 2022, reporting earnings per share of NT$1.20. The revenue over the period was NT$53.51 billion, up 5.1% compared to the revenue over the same period last year.
At the end of the third quarter of 2022, 5 hedge funds in the database of Insider Monkey held stakes worth $123.6 million in Chunghwa Telecom Co., Ltd (NYSE:CHT), compared to 6 in the previous quarter worth $152.5 million.
11. TELUS Corporation (NYSE:TU)
Number of Hedge Fund Holders: 19
TELUS Corporation (NYSE:TU) provides a range of telecommunications and information technology products and services in Canada. On October 27, Telus said that it has agreed to acquire Charlottesville, a Virginia-based digital product provider from WillowTree for a total enterprise value of $1.225 billion. The consideration is inclusive of $210 million of assumed debt, of which $125 million will be settled in TU subordinate voting shares.
On November 8, investment advisory BMO Capital maintained an Outperform rating on TELUS Corporation (NYSE:TU) stock and lowered the price target to C$35 from C$37. Analyst Keith Bachman issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in TELUS Corporation (NYSE:TU) with 3.4 million shares worth more than $67.9 million.
10. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 32
Nexstar Media Group, Inc. (NASDAQ:NXST) is a television broadcasting and digital media company that focuses on the acquisition, development, and operation of television stations and interactive community websites and digital media services in the United States. On November 8, Nexstar Media posted earnings for the third quarter of 2022, reporting earnings per share of $7.30, beating market estimates by $1.89. The revenue over the period was $1.27 billion, up 9.5% compared to the revenue over the same period last year and missing market estimates by $20 million.
On November 11, Barrington analyst James Goss maintained an Outperform rating on Nexstar Media Group, Inc. (NASDAQ:NXST) stock and lowered the price target to $200 from $240, highlighting that the company reported third-quarter revenues below estimates and EBITDA that was slightly lower due to the miss on revenues.
At the end of the third quarter of 2022, 32 hedge funds in the database of Insider Monkey held stakes worth $685.8 million in Nexstar Media Group, Inc. (NASDAQ:NXST), compared to 33 in the preceding quarter worth $779 million.
In its Q1 2022 investor letter, Richie Capital Group, an asset management firm, highlighted a few stocks and Nexstar Media Group, Inc. (NASDAQ:NXST) was one of them. Here is what the fund said:
“Nexstar Media Group (NXST up 24.8%) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. NXST is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”
9. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 40
DISH Network Corporation (NASDAQ:DISH) provides pay-TV services in the United States. On November 7, Dish Network Corp priced a $2 billion offering of its 11.75% senior secured notes due 2027. The notes will be issued at 98.171% of the principal amount.
On November 4, Citi analyst Michael Rollins maintained a Buy rating on DISH Network Corporation (NASDAQ:DISH) stock and lowered the price target to $33 from $34, highlighting that the quarter saw continued progress on the 5G network built by the firm.
At the end of the third quarter of 2022, 40 hedge funds in the database of Insider Monkey held stakes worth $776.7 million in DISH Network Corporation (NASDAQ:DISH), compared to 41 in the preceding quarter worth $936.9 million.
8. Altice USA, Inc. (NYSE:ATUS)
Number of Hedge Fund Holders: 42
Altice USA, Inc. (NYSE:ATUS) provides broadband communications and video services in the United States, Canada, Puerto Rico, and the Virgin Islands. On November 2, Altice USA posted earnings for the third quarter of 2022, reporting earnings per share of $0.19, missing market estimates by $0.16. The revenue over the period was $2.39 billion, down 7.0% compared to the revenue over the same period last year and missing market estimates by $60 million.
On November 9, Deutsche Bank analyst Bryan Kraft maintained a Hold rating on Altice USA, Inc. (NYSE:ATUS) stock and lowered the price target to $6 from $9, highlighting that the company's results for the third quarter can be summarized as a slight worsening of trends from a competitive point of view.
Among the hedge funds being tracked by Insider Monkey, New York-based firm HG Vora Capital Management is a leading shareholder in Altice USA, Inc. (NYSE:ATUS) with 15 million shares worth more than $87.5 million.
In its Q2 2022 investor letter, MPE Capital, an asset management firm, highlighted a few stocks and Altice USA, Inc. (NYSE:ATUS) was one of them. Here is what the fund said:
“Two (very) costly mistakes I’ve made over the last twelve months have been my investments in Altice USA, Inc. (NYSE:ATUS) and Poshmark. Both are down over 50% from my initial purchase price. I not only poorly appraised business quality; I also incorrectly appraised the intrinsic value of both of these companies. It should rarely end up being the case that we pay over intrinsic value, in the worst case we should never lose money on an investment. I will dive into one of these mistakes below and maybe dive into the other in a future letter. My thinking when buying Altice USA was that they operate as a duopoly in their main footprint, the New York Tri-State area. They provide a needs-based service: internet, video, and voice services. I figured this is a very stable business with high barriers to entry. Management seemed competent as well based on historical capital allocation decisions. I didn’t fully appreciate at the time how poorly positioned they were relative to Verizon Fios, as well as how fiercely competitive the business can get on promotions and customer acquisition.
Altice offers hybrid fiber coaxial (HFC) while Fios offers fiber-to-the-home (FTTH). FTTH is a far superior product, which has led to some share loss to Fios in the parts of their footprint that overlap. There have also been some subscriber losses in their other footprint due to new cable entrants and fixed wireless offerings.
My original thinking was that the video business will go to zero over time due to continued pressure from services like Netflix. In hindsight, I overstated their free cash flows excluding the video business due to difficulties disaggregating their business results. This FCF delta is a huge contributor to the difference between my current and original estimates of intrinsic value. Now, it’s possible that the video business doesn’t go to zero; however, I have a hard time envisioning that many households in ten years will still subscribe to linear television.
After losing some subscribers and facing some headwinds, they are now reinvesting many billions over the next few years to fiberize the majority of their footprint. I think this is a great plan and it will hopefully cement their position as a true duopoly in the New York TriState area. However, in their other major footprint, new fiber entrants are coming in and competition will only intensify. There are also some new entrants entering this space like Starlink satellite internet and fixed wireless internet from tier-one mobile carriers. I think these will generally be more expensive and inferior to FTTH; however, they may end up putting some pricing pressure on Altice over time.”
7. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 61
AT&T Inc. (NYSE:T) provides telecommunications, media, and technology services worldwide. On November 2, AT&T revealed that it is expanding its existing credit facility to $12 billion from $7.5 billion. The company said that advances would be used for general corporate purposes. It is also amongst the most notable dividend-paying stocks in the market.
On October 24, Raymond James analyst Frank Louthan upgraded AT&T Inc. (NYSE:T) stock to Strong Buy from Outperform with an unchanged price target of $24, noting that the company will outperform Verizon over the coming several months based on the current operating performance between two companies.
At the end of the third quarter of 2022, 61 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in AT&T Inc. (NYSE:T), compared to 55 in the previous quarter worth $1.7 billion.
In its Q2 2022 investor letter, Chartwell Investment Partners, an asset management firm, highlighted a few stocks and AT&T Inc. (NYSE:T) was one of them. Here is what the fund said:
“In the Dividend Equity accounts, the three best performers in Q2 include AT&T (NYSE:T, 2.5%), up 17.1%. AT&T completed the spin of the WarnerMedia business (HBO, CNN, etc.), and the market seemed to like the “back-to-basics” approach. Also, the telco business is expected to do relatively well in an inflationary environment.”
6. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 62
Verizon Communications Inc. (NYSE:VZ) offers communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. On December 1, Verizon Communications declared a quarterly dividend of $0.6525, in line with the previous and the forward yield was 6.83%.
On October 26, Morgan Stanley analyst Simon Flannery maintained an Equal Weight rating on Verizon Communications Inc. (NYSE:VZ) stock and lowered the price target to $41 from $58, highlighting that the firm was able to avoid another guidance cut but investors still have questions about the forward strategy given struggles to grow the consumer postpaid phone base in a strong wireless market. Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Verizon Communications Inc. (NYSE:VZ) with 8 million shares worth more than $304.6 million.
Alongside T-Mobile US, Inc. (NASDAQ:TMUS), Charter Communications, Inc. (NASDAQ:CHTR), and Alphabet Inc. (NASDAQ:GOOG), Verizon Communications Inc. (NYSE:VZ) is one of the best communications stocks to buy today according to elite investors.
In its Q3 2022 investor letter, Mawer Investment Management, an asset management firm, highlighted a few stocks and Verizon Communications Inc. (NYSE:VZ) was one of them. Here is what the fund said:
“There are a few other segments of our portfolios that displayed weakness in the quarter. Cable and telecommunication companies have been an area that has lagged behind the broader market as their worlds are increasingly colliding. Companies such as Verizon (NYSE:VZ) have been impacted as the wireless operator is spending heavily to attract internet subscribers with fixed wired access and the cable companies are trying to build wireless businesses.”
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Disclosure. None. 12 Best Communication Stocks To Buy Today is originally published on Insider Monkey.
