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The 5G revolution can send these 3 stocks up
We have an entire 2021 month behind us now, and some trends are becoming clearer. The coronavirus crisis may still be with us, but as vaccination programs expand, the end is in sight. With President Trump out of the picture and Democrats in control of the Houses of Congress and the White House, the policy seems more predictable. And both developments bode well for an economic recovery this year. Looking back over the past year, we can also see some trends that have remained steady despite the pandemic, the stoppages and the overwhelming electoral season. One of the most important is the continued release of 5G network technology. These new networks bring with them a fuller fulfillment of the promises inherent in the digital world. Faster connections, lower latency, greater online capacity, clearer signals – everything will greatly increase the capabilities of the networked world. And it won’t just be mundane things like remote work or remote offices that will benefit – 5G will allow the Internet of Things and autonomous vehicles to further develop their potential. There is even talk of medical applications, of doctors located remotely performing surgeries using digitally controlled microsurgical tools. And those are just the possibilities that we can see from now on. Who knows what the future will really bring? To that end, we accessed the TipRanks database to learn more about three exciting moves in the 5G space. According to Street, we are likely to see more interesting developments in the coming years, as this technology takes over. Skyworks Solutions (SWKS) The first 5G name we’re looking for, Skyworks, is a semiconductor chip maker that generated $ 3.4 billion in total revenue for fiscal 2020. Skyworks, which is the leading chip supplier for Apple’s iPhone series saw a massive 68% year-over-year increase in revenue for 1TFY21 – revenue reached $ 1.51 billion, a company record, and also much higher than analysts predicted. Much of Skyworks’ fiscal sales success in the first quarter came after Apple launched the iPhone 12 line with 5G capability. Strong sales of the popular handheld device have meant that profits have run down the supply line – and Skyworks channels a disproportionate part of its business to Apple. In fact, Apple’s orders accounted for 70% of Skyworks revenue in the recent quarter. However, the iPhone was not the only 5G device to receive Skyworks chips – the company is also a major supplier for Samsung in Korea and Xiaomi in China, and has seen demand increase as these companies have also launched smartphones with capacity 5G. Finally, Skyworks supplies semiconductor chip components to the wireless infrastructure sector, specifically for the ‘small cell’ transmission units that are important in the wireless signal propagation network. As wireless providers switch to 5G transmission, Skyworks has seen orders for their products increase. In his note on Skyworks for Benchmark, 5-star analyst Ruben Roy writes: “SWKS has significantly exceeded consensus estimates and provided guidance for the March quarter that is also well ahead of consensus estimates, as mobile revenue related to 5G and revenue from the broad base segment continued to accelerate … In addition to the continued strength of the design gain momentum and customer activity, we are encouraged by SWKS ‘confident tone towards the general demand environment and opportunities for growth of content. ”In line with his comments, Roy evaluates SWKS as a purchase along with a target price of $ 215. At current levels, this implies a 20% increase for next year. (To see Roy’s history, click here) Roy is broadly aligned with the rest of Wall Street, which has assigned 13 buy ratings and 7 SWKS retentions in the past three months – and sees stocks growing by about 15% in the next 12 months, at a target price of $ 205.69. (See SWKS stock analysis at TipRanks) Qorvo, Inc. (QRVO) Qorvo’s main products are chipsets used in the construction of radio frequency transmission systems that power broadband and wi-fi communication networks. The connection between this niche and 5G is clear – as network providers upgrade their RF hardware to 5G, they also update the semiconductor chips that control the systems. This chip maker has a solid niche, but it’s not resting on its laurels. Qorvo is actively developing a range of new products specifically for 5G systems and deployment. This portfolio of 5G radio frequency products includes phase shifters, switches and integrated modules and contains infrastructure and mobile products. Qorvo posted $ 3.24 billion in total revenue for fiscal 2020. That revenue represents a 4.8% year-over-year increase – and the company’s sales have accelerated in fiscal 2021. The most recent quarterly report , for the second fiscal quarter, showed $ 1.06 billion in revenue, an increase of 31% yoy. Rajvindra Gill, 5-star analyst at Needham, is optimistic about Qorvo’s prospects, noting: “Qorvo reported strong sales and gross margins as the 5G momentum reaches CY21 in atypical seasonality … The company is planning 500 million devices 5G to be manufactured in 2021, with an increment of $ 5-7 in content / unit from 4G to 5G. Management believes that the adoption of ultra-broadband will be a key growth factor for smartphones going forward … “To this end, Gill puts a price target of $ 220 on QRVO shares, suggesting room for a 31% rise in 2021. Thus, he evaluates the stock to be purchased. (To see Gill’s history, click here) What do the other analysts have to say? 13 purchases and 6 retentions add up to a moderate purchase analyst consensus given the average target price from $ 192.28, shares may rise ~ 15% from current levels. (See QRVO stock analysis at TipRanks) Telefonakiebolaget LM Ericsson (ERIC) From chipsets, we will switch to handsets. Ericsson, the Swedish telecommunications giant, has has long been a leader in mobile technology and is well known for its infrastructure and software that enable IP networks, broadband, cable TV and other telecommunications services. Ericsson is the largest European telecommunications company and the largest provider of 2G / 3G / 4 G outside China. But this is all in the background. Ericsson is also a leader in the rollout of Europe’s growing 5G networks. Ericsson is involved in the launch of 5G in 17 countries in Europe, the Americas and Asia, and its product line includes base infrastructure units and devices, giving the company an interest in all aspects of the new 5G networks. Ericsson’s revenue performance in 2020 was not affected by the corona crisis. Yes, revenue fell in the first quarter, but this was in line with the company’s historical pattern of revenue growth from the first to the fourth quarter. While the company’s 1H20 revenues showed small declines in the annual comparison, the 2H20 gains were greater. In the third quarter, revenue of $ 6.48 billion increased 8.7% year-on-year, and revenue of $ 8.08 billion in the fourth quarter increased 17% over the previous year. The company’s shares also performed well during the ‘corona year’ and show a 64% gain in 12 months. Raymond James 5-star analyst Simon Leopold bluntly attributes Ericsson’s recent gains to its participation in 5G launches. “The expected implementation of 5G in Japan has started. The participation gains continue as Ericsson benefits from the challenges faced by its biggest competitors and more operators adopt 5G … it seems obvious that Ericsson should be gaining market share … Competitor Nokia avoided Chinese 5G projects , citing profitability challenges, but Ericsson appears to be profiting from the challenging region. ”Leopold classifies this stock as Outperform (ie, Buy), and its target price of $ 15 implies a potential increase of ~ 14% for the following year. (To see Leopold’s track record, click here) Analyst Raymond James, while optimistic about ERIC, is less than the Wall Street consensus. The stock has a strong buy consensus rating, based on 5 unanimous reviews, and the average price target of $ 16.50 indicates a 25% growth potential compared to the $ 13.19 share price. (See ERIC stock analysis at TipRanks) To find good ideas for trading 5G shares with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investments.