The 5G revolution could send those 3 stocks higher
It’s now a full month of 2021 and some trends are becoming clearer. The coronavirus crisis may still be with us, but with the expansion of vaccination programs, the end is in sight. With President Trump out of the picture and the Democrats holding both the Congress House and the White House, politics looks more predictable. Both developments are a good sign of an economic recovery this year. Looking back over the past year, we can also see some trends that have remained firm despite the pandemic, shutdowns, and charged election season. One of the most important is the continued adoption of 5G network technology. These new networks bring with them a broader fulfillment of the promises inherent in the digital world. Faster connections, lower latency, higher online capacity, clearer signals – all of these will vastly improve the capabilities of the connected world. Not only do everyday things like teleworking or remote offices benefit from this – with 5G, the Internet of Things and autonomous vehicles can further develop their potential. There is even talk of medical applications, of remote doctors who perform operations with digitally controlled microsurgical instruments. And these are just the possibilities that we can see from now on. Who knows what the future will really bring? To do this, we went to TipRanks’ database to find out more about three exciting games in the 5G space. According to Street, we are likely to see more interesting developments in the next few years as this technology is adopted. Skyworks Solutions (SWKS) The first name for 5G, Skyworks, is a semiconductor chip maker with total sales of $ 3.4 billion in fiscal 2020. Skyworks, a major supplier of chips for Apple’s iPhone line of products, saw revenue jump 68% year over year in the first quarter of fiscal year 21 – revenue reached and exceeded $ 1.51 billion, a company record the forecasts of the analysts. Much of Skyworks’ first-quarter sales success came after Apple launched the 5G-enabled iPhone 12 line. Due to the strong sales of the popular handset, the profits flowed into the supply line – and Skyworks is transferring a disproportionate share of its business to Apple. In fact, Apple orders made up 70% of Skyworks’ sales last quarter. However, the iPhone wasn’t the only 5G handset to receive Skyworks chips. The company is also a key supplier to Korean company Samsung and Chinese company Xiaomi. Demand increased as these companies also launch 5G-enabled smartphones. Finally, Skyworks supplies semiconductor chip components to the wireless infrastructure sector, particularly to the small cell transmission units that are important to the wireless signal propagation network. As wireless carriers move to 5G, Skyworks has seen an increase in orders for its products. In his comment on Skyworks for Benchmark, the 5-star analyst Ruben Roy writes: “SWKS has significantly exceeded the consensus estimates and presented forecasts for the March quarter that are also well above the consensus estimates, as 5G-related mobile phone revenues and Further accelerated broad segment sales … In addition to the continued strength of design profit and customer activity, we at SWKS are confident about the general demand environment and the opportunities to increase content. “In line with his comments, Roy rates SWKS a Buy along with a target price of $ 215. At the current level, this means an upward movement of 20% for the coming year. (To see Roy’s track record, click here.) Roy broadly agrees with the rest of Wall Street, who assigned SWKS 13 buy ratings and 7 holds in the past three months – and sees the stock around for the next month about 15% grows 12 months to a price target of $ 205.69. (See SWKS stock analysis on TipRanks.) Qorvo, Inc. (QRVO) Qorvo’s main products are chipsets that are used in the construction of radio frequency transmission systems for wireless LAN and broadband communications networks. The connection of this niche to 5G is clear: when network providers upgrade their RF hardware to 5G, they also upgrade the semiconductor chips that control the systems. This chipmaker has a solid niche, but it’s not resting on its laurels. Qorvo is actively developing a number of new products specifically for 5G systems and their deployment. This 5G radio frequency product portfolio includes phase shifters, switches and integrated modules as well as infrastructure and mobile products. Qorvo had total sales of $ 3.24 billion in fiscal 2020. These sales represent an increase of 4.8% over the previous year – and the company’s sales accelerated in the 2021 financial year. The most recent quarterly report for the second fiscal quarter included $ 1.06 billion in sales, up 31% over the previous year. Needham 5-star analyst Rajvindra Gill is optimistic about Qorvo’s prospects, noting, “Qorvo reported strong sales and gross margins as 5G momentum transitions into CY21 due to atypical seasonality … The company plans to manufacture of 500 million 5G cell phones in 2021, with incremental content / unit of $ 5 to $ 7 from 4G to 5G. Management believes that the adoption of ultra-broadband will be a major growth driver for smartphones going forward … “To this end, Gill sets a price target of $ 220 on QRVO shares, which suggests an upward trend in 2021 So he rates the buy here. (To see Gill’s track record, click here) What other analysts say 13 buys and 6 holds suggests analyst consensus for a moderate buy given the average target price Shares could rise ~ 15% from $ 192.28 (See QRVO stock analysis on TipRanks) Telefonakiebolaget LM Ericsson (ERIC) From chipsets to mobile phones, Ericsson, the Swedish telecommunications giant, has long been a leader in mobile technology and is well known for its infrastructure and software that enable IP networks, broadband, cable television and other telecommunications services, Ericsson is the largest eur opean telecommunications company and the largest 2G / 3G / 4G infrastructure provider outside of China. But all in the background. Ericsson is also a leader in the r ollout of Europe’s growing 5G networks. Ericsson is involved in rolling out 5G in 17 countries in Europe, America and Asia. The product line includes base units and handsets for the infrastructure, which makes the company interested in all aspects of the new 5G networks. Ericsson’s sales development in 2020 was not particularly affected by the corona crisis. Yes, the return on sales decreased in the first quarter, but this was in line with the company’s historical pattern of increasing sales from Q1 to Q4. While the company’s 1H20 sales declined slightly year over year, 2H20 profits were higher. Third quarter revenue increased 6.7% to $ 6.48 billion and fourth quarter revenue increased 17% year over year of $ 8.08 billion. The company’s shares have also performed well in the “Corona year” and show a 12-month profit of 64%. Raymond James’ 5-star analyst Simon Leopold bluntly attributes Ericsson’s recent profits to participating in 5G rollouts. “Japan’s anticipated 5G roll-out has begun. Stock gains continue as Ericsson capitalizes on the challenges posed by its biggest competitors and more operators take advantage of 5G. It seems obvious that Ericsson should be gaining market share. Competitor Nokia avoided the Chinese 5G projects, citing profitability issues, but Ericsson appears to be benefiting from the challenging region. “Leopold rates this stock as outperforming (ie buying) and its price target of $ 15 implies an upside potential of ~ 14% for the coming year. (To see Leopold’s track record, click here.) The Raymond James analyst, while bullish about ERIC, is less than the Wall Street consensus. The stock has a strong buy consensus rating based on a unanimous 5 ratings, and the average price target of $ 16.50 indicates 25% growth potential over the stock price of $ 13.19. (See ERIC stock analysis on TipRanks.) To find great ideas for trading 5G stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.