The macroeconomic headwinds have kept technology, telecommunication, and media stocks under pressure this year. However, the demand for high-speed data connectivity is fueling the growth of the telecom industry.

President Biden’s Bipartisan Infrastructure Law provides a $65 billion investment to expand high-speed internet access across the country. Moreover, the global telecom market is expected to grow at a CAGR of 7.4% to $3.82 trillion by 2026. 

Investors’ interest in telecom stocks is evident from the SPDR S&P Telecom ETF’s (XTL) 5.7% gains over the past three months.

Since the industry is well-positioned to grow in the long run, it could be wise to buy quality telecom stock Verizon Communications Inc. (VZ). On the other hand, FingerMotion, Inc. (FNGR) is best avoided now because of its fundamental weakness.

Stock to Buy:

Verizon Communications Inc. (VZ)

VZ offers communications, technology, information, and entertainment products and services worldwide to consumers, businesses, and governmental entities. It operates through two segments: Consumer and Business.

On November 30, 2022, VZ Business announced a global Network-as-a-Service (NaaS) partnership with Wipro Limited (WIT) that will accelerate the network modernization and cloud transformation journey for businesses.

Senior Vice President and Chief Revenue Officer of VZ’s Global Enterprise and Public Sector, Massimo Peselli, believes that the partnership with WIT will enable businesses to future-proof their network in a manner that is more flexible, agile, and predictive, centered around their specific needs.

For the fiscal third quarter ended September 30, 2022, VZ’s total operating revenues increased 4% year-over-year to $34.24 billion. The company’s wireless equipment revenue grew 22.9% from the prior-year period to $6.58 billion. Its total assets came in at $375.09 billion as of September 30, 2022, compared to $366.60 billion for the fiscal year ended December 31, 2021. 

Analysts expect VZ’s revenue for the quarter ending December 31, 2022, to increase 3.6% year-over-year to $35.30 billion. The company shows an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 0.9% to close the last trading session at $39.25.  

VZ’s POWR Ratings reflect this positive outlook. VZ has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR ratings assess stocks by 118 different factors, each with its own weighting. 

Within the Telecom – Domestic industry, it is ranked #3 among 19 stocks. The company has a B grade for Growth and Stability. Click here to see the additional POWR ratings of VZ for Value, Momentum, Sentiment, and Quality. 

Stock to Sell:

FingerMotion, Inc. (FNGR)

FNGR, a mobile data specialist company, provides mobile payment and recharge platform solutions. The company offers telecommunication providers’ products and services, including data plans, subscription plans, mobile phones, and loyalty points redemption services.

FNGR’s revenue for the fiscal second quarter ended August 31, 2022, declined 7.5% year-over-year to $4.98 million. The company’s net loss from operations widened 7.6% year-over-year to $1.49 million. Its net loss attributable to the company’s shareholders widened 5.6% year-over-year to $1.54 million. Additionally, its net loss per share came in flat at $0.04.

The stock has fallen 56.4% year-to-date to close the last trading session at $3.10. 

FNGR’s grim outlook is reflected in its POWR Ratings. The company has an overall rating of F, which equates to a Strong Sell. It is ranked #17 in the same industry.

In addition, it has an F grade for Quality and a D for Value, Momentum, and Stability. Click here to see the additional ratings of FNGR for Growth and Sentiment.

VZ shares were trading at $39.29 per share on Wednesday morning, up $0.04 (+0.10%). Year-to-date, VZ has declined -20.25%, versus a -18.09% rise in the benchmark S&P 500 index during the same period.

About the Author: Malaika Alphonsus

Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions. More...

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