The continuing digitization across industries and heightened demand for efficient cloud-based services to support hybrid working arrangements have boosted the market for 5G technology. The need for more bandwidth, lower latency, faster download speeds, and efficient performance makes 5G technology integral to several businesses.
Although ongoing supply chain disruptions are delaying the delivery of raw materials, and input costs have been rising lately, significant funding from last year’s bipartisan infrastructure bill brightens the industry’s long-term growth prospects. Investors’ interest in this space is evident in the Direxion Daily 5G Communications Bull 2X Shares ETF’s (TENG) 6.6% gains over the past month. And the 5G Technology market is expected to grow at a 71.9% CAGR to $248.40 billion by 2028.
Given the industry’s exceptional growth prospects, we think fundamentally sound 5G stocks Crown Castle International Corp. (CCI), Cirrus Logic, Inc. (CRUS), and Keysight Technologies, Inc. (KEYS) could be solid bets now.
Crown Castle International Corp. (CCI)
CCI is a real estate investment trust (REIT) that owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across the U.S. market. Its business provides access, including space or capacity, to its shared communications infrastructure via long-term contracts in various forms, including lease, license, sublease, and service agreements. CCI is based in Houston, Tex.
On Jan.6, 2022, CCI and T-Mobile US, Inc. (TMUS), a U.S. wireless network operator that is majority-owned by German telecommunications company Deutsche Telekom AG (DTEGY), signed a new 12-year agreement to support the continued build-out of TMUS’ nationwide 5G network with increased access to CCI’s towers and small cell locations. The agreement should expand the reach of CCI’s comprehensive infrastructure, consisting of towers, small cells, and fiber and generate long-term growth.
For its fiscal year 2021 fourth quarter, ended Dec.31, 2021, CCI’s net revenues came in at $1.65 billion, representing a 10.8% year-over-year improvement. The company had $292 million in cash and cash equivalents as of Dec. 31, 2021.
Analysts expect CCI’s EPS to improve 53.4% year-over-year to $3.88 for its fiscal year 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The $6.88 billion consensus revenue estimate for the same fiscal year indicates an 8.5% year-over-year improvement. The company’s EPS is expected to grow at a 12.4% rate per annum over the next five years. Over the past year, the stock has gained 11.5% in price and closed yesterday’s trading session at $196.52.
CCI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a 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 an A grade for Growth and a B grade for Stability and Momentum. Click here to see the additional ratings for CCI’s Value, Quality, and Sentiment.
CCI is ranked #10 of 50 stocks in the REITs – Diversified industry.
Cirrus Logic, Inc. (CRUS)
CRUS provides integrated circuits (ICs) for audio and voice signal processing applications. The Austin, Tex.-based concern offers portable products in smartphones, tablets, digital headsets, and wearables. Its non-portable audio and other products include analog and mixed-signal components that target the consumer market, including smart home applications and the automotive, energy, and industrial markets.
On July 8, 2021, CRUS agreed to acquire Lion Semiconductor, an electronic parts supplier, for $335 million in cash. The acquisition affords CRUS access to Lion’s proprietary fast-charging products and robust intellectual property portfolio and accelerates its growth in the high-performance mixed-signal business.
CRUS’ net sales for its fiscal 2022 third quarter, ended Dec. 25, 2021, increased 12.9% year-over-year to $548.35 million. The company’s non-GAAP gross profit came in at $289.77 million, representing a 15.1% rise from the prior-year period. Its non-GAAP operating income came in at $174.25 million, up 19.4% from the prior-year period. While its non-GAAP net income increased 17.3% year-over-year to $149.80 million, its non-GAAP EPS increased 19.3% to $2.54. The company had $195.12 million in cash and cash equivalents as of Dec. 25, 2021.
The $6.30 consensus EPS estimate for its fiscal year 2022 ended March 31, 2022, represents a 37.6% year-over-year improvement. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect CRUS’ revenue to improve 25% year-over-year to $1.71 billion for the same fiscal year. The company’s EPS is expected to grow at a 15% rate per annum over the next five years. The stock has declined 8.3% in price over the past year and ended yesterday’s trading session at $78.86.
CRUS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Sentiment. Click here to see the additional ratings for CRUS’ Stability, Quality, and Momentum.
CRUS is ranked #24 of 96 stocks in the A-rated Semiconductor & Wireless Chip industry.
Keysight Technologies, Inc. (KEYS)
KEYS in Santa Rosa, Calif., provides electronic design and test solutions to commercial communications, networking, aerospace, defense, and government, automotive, energy, semiconductor, electronic, and education industries internationally. The company operates through its Communications Solutions Group and Electronic Industrial Solutions Group segments. It offers product support, technical support, training, and consulting services and sells its products through a direct sales force, distributors, resellers, and manufacturer’s representatives.
On April 6, 2022, Luxshare Technologies, a global designer and manufacturer of cable, connector, module assembly, and sub-system solutions, announced a collaboration with KEYS to deliver an advanced solution to validate the interoperability of data center equipment in complex 800 Gigabit Ethernet (GE) environments. Because Data Center Operators (DCOs) are moving towards 800GE to accelerate the upgrade cycle of switching silicon to derive power-saving benefits, the combination of the Keysight G800GE test system and LuxshareTech leading photonics integration technology addresses the interoperability challenges and enables the data center community to accelerate validation of 112G electrical lane optical transceivers and network infrastructure. The companies should witness high demand in the coming months.
For its fiscal 2022 first quarter, ended Jan. 31, 2022, KEYS’ revenue increased 5.9% year-over-year to $1.25 billion. The company’s income from operations came in at $271 million, representing a 27.8% rise from the prior-year period. KEYS’ non-GAAP net income increased 13% year-over-year to $305 million. Its non-GAAP EPS came in at $1.65, up 15.4% from its year-ago period. The company had $1.98 billion in cash and cash equivalents as of Jan. 31, 2022.
Analysts expect the company’s EPS to grow 12.5% from the prior-year period to $7.01 for its fiscal 2022, ending Oct. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $5.28 billion consensus revenue estimate for the same fiscal year indicates a 6.9% year-over-year improvement. KEYS’ EPS is expected to grow at a 10.2% rate per annum over the next five years. The stock has gained 3.8% in price over the past month and closed yesterday’s trading session at $151.32.
KEYS’ POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Stability and Sentiment. Click here to see the additional ratings for KEYS’ Growth, Value, and Momentum.
KEYS is ranked #5 of 48 stocks in the Technology – Electronics industry.
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CCI shares were unchanged in premarket trading Friday. Year-to-date, CCI has declined -5.05%, versus a -5.07% 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. More...
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