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The 5G revolution could send these three stocks higher
We now have a full month of 2021 behind us, and some trends are becoming clearer. The coronavirus crisis may still be with us, but as the vaccination programs expand, the end is in sight. With President Trump out of the picture and the Democrats holding both the House of Representatives and the White House, politics seems more predictable. And both of these developments predict an economic recovery this year. Looking back, to the year that has been, we can also see some trends that have remained strong despite the pandemic, the stalemate and the cherished election season. One of the most important is the continuous implementation of 5G network technology. These new networks bring a fuller realization of the promises in the digital world. Faster connections, lower latency, higher online capacity, clearer signals – all will greatly enhance the capabilities of the networking world. And it will not only be everyday things like telecommuting or remote offices, but with 5G, Internet of Things and autonomous vehicles can further develop their potential. There is even talk of medical applications, of doctors being located remotely, performing surgery using digitally controlled microsurgical instruments. And these are just the possibilities we can see from now on. Who knows what the future will really hold? To this end, we have set up TipRanks’ database to learn more about three exciting plays in the 5G space. According to the street, we will probably see further interesting developments over the next few years as this technology takes over. Skyworks Solutions (SWKS) The first 5G name we look at, Skyworks, is a semiconductor chip maker that generated $ 3.4 billion in total revenue for FY2020. Skyworks, the best supplier of chips for Apple’s iPhone series, saw a massive 68% year-on-year increase in the 1QFY21 increase – the top line reaches $ 1.51 billion, ‘ a company record, and also much higher than analysts had predicted. Much of Skyworks’ first-quarter financial success came after Apple unveiled the iPhone 12 series for iPhone 5. Strong sales in the popular device led to profits slipping through the inventory line – and Skyworks is sending an exorbitant portion of its business to Apple. In the past quarter, Apple orders accounted for 70% of Skyworks’ revenue. However, the iPhone was not the only 5G device on the receiving end of Skyworks’ chips – the company is also a major supplier to Korean Samsung and China’s Xiaomi, and demand has risen as these companies also introduce 5G smartphones. Finally, Skyworks supplies semiconductor chip components to the wireless infrastructure sector, specifically to the ‘small cell’ transmission units that are important in the distribution network of wireless signals. While wireless providers are switching to 5G transmission, Skyworks has increased orders for its products. In his note on Skyworks for Benchmark, 5-star analyst Ruben Roy writes: ‘SWKS significantly defeated consensus estimates and provided guidance in the March quarter, which is also much better than consensus estimates as 5G-related mobile revenue and broad-segment revenue continues to accelerate … In addition to the sustained strength of design momentum and customer activity, we are encouraged with a SWKS confident tone in relation to the overall demand environment and opportunities that increase content. Consistent with his comments, Roy SWKS is considering a buy with a price target of $ 215. At current levels, this implies a 20% increase for the coming year. (Click here to see Roy’s performance history.) Roy largely agrees with the rest of Wall Street, which has awarded SWKS 13 Buy Ratings and 7 Holdings over the past three months – and sees the stock rise by about 15% over the next month growth. 12 months, up to a target price of $ 205.69 (see SWKS stock analysis on TipRanks) Qorvo, Inc. (QRVO) Qorvo’s main products are chip sets used in the construction of radio frequency transmission systems that power WiFi and broadband communication networks. The connection of this niche to 5G is clear – as network providers upgrade their RF hardware to 5G, they are also upgrading the semiconductor chips that control the systems. This chipmaker has a solid niche, but does not rest on its laurels. Qorvo is actively developing a range of new products specifically for 5G systems and implementation. This 5G Radio Frequency Product Portfolio contains phase shifters, switches and integrated modules, and includes both infrastructure and mobile products. Qorvo generated $ 3.24 billion in total revenue for the 2020 financial year. Revenue represents an increase of 4.8% year-on-year – and the company’s sales will increase in fiscal 2021. The most recent second quarterly fiscal report showed $ 1.06 billion. in revenue, an increase of 31% per annum. Rajvindra Gill, 5-star analyst at Needham, is positive about Qorvo’s prospects and notes: “Qorvo reported strong sales and gross margins as the 5G momentum in the CY21 series is filled in the typical seasonal area … 2021 , with an increasing $ 5-7 content / unit from 4G to 5G. Management believes that the adoption of ultra-broadband will be a major growth driver for smartphones going forward … ‘Gill sets a price target of $ 220 on QRVO shares, indicating that it will be 31% upside down in 2021. share for sale. (Click here to see Gill’s record.) What do other analysts have to say? 13 Buys and 6 Holds is a moderate buy-consensus analyst. Given the average price target of $ 192.28, stocks can climb ~ 15%. from current levels. (See QRVO stock analysis on TipRanks) Telefonakiebolaget LM Ericsson (ERIC) From chipsets we switch to devices. Ericsson, the Swedish telecommunications giant, has long been a leader in mobile technology, and is known for its infrastructure and software that enables IP networks, broadband, cable TV and other telecommunications services. Ericsson is the largest European telecommunications company and the largest 2G / 3G / 4G infrastructure provider outside China. But it’s all in the background. Ericsson is also a leader in the entire growing 5G networks of Europe. Ericsson is involved in 5G implementation in 17 countries in Europe, the Americas and Asia, and its product range includes infrastructure base units and devices, giving the company an interest in all aspects of the new 5G networks. Ericsson’s revenue performance in 2020 was not particularly troubled by the corona crisis. Yes, the top line dropped in the first quarter, but it was in line with the company’s historical pattern of rising from the first quarter to the fourth quarter. Although the company’s 1H20 revenue showed small yoy declines, the 2H20 profits were higher. In the third quarter, the top line of $ 6.48 billion increased by 8.7%, and Q4’s revenue of $ 8.08 billion by 17% compared to the previous year. The company’s shares also performed well during the ‘corona year’, showing a 12-month gain of 64%. Raymond James, a 5-star analyst, Simon Leopold, knows Ericsson’s recent gain from its participation in 5G rollout. Japan’s awaited 5G rollout has begun. Shares continue to rise as Ericsson takes advantage of challenges facing its biggest competitors and embraces more entrepreneurs 5G … it seems obvious that Ericsson should gain market share … Competitor Nokia avoided Chinese 5G projects with reference to profitability challenges, but Ericsson appears to be making a profit in the challenging region. Leopold rates this stock as a better performance (ie buy), and its $ 15 price target implies an upward potential of ~ 14% for the coming year. (To see Leopold’s record, click here.) The Raymond James analyst, although on ERIC, is actually less than the consensus on Wall Street. The stock has a strong buy consensus rating, based on unanimous 5 reviews, and the average price target of $ 16.50 indicates growth potential of 25% from the share price of $ 13.19. (See ERIC stock analysis on TipRanks.) To find great ideas for 5G stocks at attractive valuations, visit TipRanks’ best-selling stocks, a newly introduced tool that unites all TipRanks stocks. Disclaimer: The opinions expressed in this article are solely those of the proposed analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.