Fifth generation (5G)network providers are poised to benefit significantly in the coming months because the U.S. Senate has approved a $1 trillion bipartisan infrastructure plan. The plan includes a $65 billion budget for broadband internet infrastructure, which is projected to accelerate 5G spectrum rollout across the U.S.
The Biden administration’s plans to provide access to high-speed internet at affordable prices in areas with no broadband infrastructure and to support the work-and-study-online trend should bolster the demand for 5G service providers. In addition, rising demand for machine-to-machine and IoT networks, mobile broadband services, and data breach concerns are anticipated to propel the growth of 5G infrastructure. The global 5G infrastructure market is expected to reach $80.5 billion by 2028, growing at a 49.8% CAGR.
Given this backdrop, we believe the prices of 5G stocks Crown Castle International Corp. (CCI), Nokia Corporation (NOK), and Skyworks Solutions Inc. (SWKS) will likely gain significantly in the near term and, hence, could be solid bets now.
Crown Castle International Corp. (CCI)
CCI in Houston, Tex., owns, manages, and leases more than 40,000 cell towers and 80,000 route miles of fiber that enable small cells and fiber solutions in every major U.S. market. This countrywide network of communications infrastructure connects towns and communities to critical data, technology, and cellular service, delivering information, ideas, and innovations to those who need it.
In June, CCI announced the pricing of its previously announced public offering of 2.500 percent Senior Notes due 2031 at $750 million. The Senior Notes will have an annual interest rate of 2.5% and will be issued at a price equivalent to 99.743% of its face value, yielding 2.529%. The company plans to use the net proceeds from this offering to repay outstanding debt and for general corporate purposes.
During the second quarter, ended June 30, 2021, CCI’s net revenue increased 9.9% year-over-year to $1.58 billion. Its operating income increased 31.9% year-over-year to $505 million, while its net income grew 94.2% from the prior-year quarter to $334 million. Its EPS increased 87.8% year-over-year to $0.77 over this period.
The company’s EPS is expected to grow 66.7% year-over-year to $2.5 in its fiscal year 2021. Analysts expect CCI’s revenue to increase 7.8% year-over-year to $6.29 billion in the current year. The stock has gained 17% over the past year and 21.4% year-to-date.
CCI’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
CCI is also rated a B grade for Stability, Sentiment, and Growth. In addition , within the Real-Estate Services industry, it is ranked #9 of 47 stocks.
To see additional POWR Ratings for Momentum, Growth, and Value for CCI, click here.
Nokia Corporation (NOK)
NOK specializes in network and Internet protocol (IP) infrastructure, software, and associated services. Nokia Networks and Nokia Technologies are two of the company’s business divisions. Ultra-Broadband Networks; IP Networks; and Applications & Analytics are among the various segments the company operates. NOK is based in Espoo, Finland.
This month, NOK announced that it had provided a private 4.9G/LTE wireless network to Western Power Distribution in the U.K. The private LTE network will be used for testing supervisory control and data collection and other mission-critical systems, such as voice services.
Also, this month, DELTA Fiber chose NOK to offer a next-generation optical transport network based on 400G wavelengths to manage increasing traffic and the continued growth of DELTA Fiber’s FTTH rollout. This win should enable NOK to expand its industrial presence and boost revenue.
During the second quarter, ended June 30, 2021, NOK’s net sales increased 4.3% year-over-year to €5.31 billion ($6.30 billion). Its operating profit rose 184.7% from its year-ago value to €484 million ($573.82 million). Its net income increased 254.6% year-over-year to €351 million ($416.14 million), while its EPS grew 200% from the prior-year quarter to €0.06 ($0.07).
A $0.31 consensus EPS estimate for next year represents a 6.9% improvement year-over-year. The $25.81 billion consensus revenue estimate for the current year represents a 3.5% increase from the same period last year. The stock has gained 19.2% over the past year and 54% year-to-date.
NOK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Sentiment, and a B for Value. In the B-rated Technology – Communication/Networking industry, it is ranked #17 of 56 stocks.
In total, we rate NOK on eight distinct levels. Beyond what we’ve stated above, we have also given NOK grades for Growth, Quality, Stability, and Momentum. Get all the NOK ratings here.
Skyworks Solutions Inc. (SWKS)
SWKS designs, develops, produces, and distributes unique semiconductor products, including intellectual property globally. The Woburn, Mass.-based company offers its products and services to various industries, including aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, etc.
Last month, SWKS acquired the Infrastructure & Automotive business of Silicon Laboratories Inc. through a $2.75 billion all-cash deal. Through this acquisition, the company aims to boost its business growth in various segments, including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, and others.
In the second quarter, ended June 30, 2021, SWKS’ net revenue increased 51.5% year-over-year to $1.12 billion. Its operating income surged 130.4% year-over-year to $339.8 million, while its net income grew 160.5% from the prior-year quarter to $337.8 million. Its EPS increased 87.8% year-over-year to $162.3 over this period.
Analysts expect SWKS’s revenue to increase 49.2% year-over-year to $5.01 billion in its fiscal year 2021. The company’s EPS is expected to grow 68.4% year-over-year to $10.32 in the current year. SWKS’ stock has gained 24.2% over the past year and 29.7% over the past nine months.
SWKS’ POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. SWKS is also rated a B for Quality and Momentum. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #38 of 99 stocks.
Click here to see additional POWR Ratings for Growth, Value, Stability, and Sentiment for SWKS.
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CCI shares were trading at $194.23 per share on Friday morning, up $0.92 (+0.48%). Year-to-date, CCI has gained 23.89%, versus a 19.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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