The transition to 5G has been in the works for a while now, leaving investors scrambling to figure out which firms will be at the forefront of the revolution. Now February is here, many companies have released their earnings reports from the last quarter (or will be soon). It’s the perfect time to try and spot which 5G stocks are heading in the right direction. T-Mobile (TMUS) stood out, earning $2.79 billion in total revenue for the quarter — a significant increase from the $1.96 billion revenue from the period ending in September 2021.
T-Mobile Stock (TMUS: NASDAQ)
T-Mobile’s performance is particularly impressive considering the company’s rocky road over the last year. In late January, its stock was priced at $101.62 — the lowest point since June 2020. Yet by early February, its value bounced up to $120.94.
However, the recent earnings report has played a part in allaying these fears.
In addition to the total revenue results, its EBITDA (earnings before interest, taxes, depreciation, and amortization) for Q1 was $6.3 billion, which represented an increase of 9.6% compared to the previous quarter.
Although hardware sales were essential for achieving these results, service revenues also rose by 6% over the year, suggesting that T-Mobile is very much still in the 5G game.
The company’s prospects for 2022 and beyond now look better than ever. Some predictions suggest T-Mobile could gain 5 million or more new postpaid customers in 2022, and more than two years on, the Sprint merger has passed its point of turbulence.
Plus, T-Mobile has so far held on to its two-year lead over its competitors in 5G deployment. If you’re looking for a mainstream mobile communications company to expose you to the 5G market, the stock is looking more appealing than ever.
Apple Stock (APPL: NASDAQ)
Apple (AAPL) might not be responsible for deploying 5G, but it’s still directly involved due to its role in introducing tailored 5G phones. There have been concerns that the performance improvements between iPhone model updates have become less significant, but access to 5G could change all of this and lead to an upgrade boom — meaning high profitability.
The last quarter was Apple’s most profitable ever, and it beat predictions across the board. Its sales grew by more than 11%, with most products benefitting. Plus, there are reports that Apple plans to reveal the iPhone SE with 5G — designed for the low-cost market — and iPad Airs with access to 5G. Apple’s stock price reflects this good news.
After performing well toward the end of 2021 — rising from $148.96 in November to a high point of $182.01 in early January 2022 — the Apple stock had a steep drop down to $159.22. However, the recent revenue report brought its price back to $175.82 within days.
The company has still failed to outline its own expectations for the future due to uncertainty surrounding the pandemic and supply issues. However, CEO Tim Cook has shown some optimism about supply challenges improving, meaning better prospects for the next quarter.
Analog Devices (ADI: NASDAQ)
When it comes to the 5G rollout, it’s not just household names like T-Mobile and Apple that are involved. The companies providing the equipment and materials needed as part of the deployment stand to benefit just as much — and among them is the semiconductor company Analog Devices (ADI).
With a 70% market share in 5G radio signal chain technology, it will play an essential role in making the world more connected.
Analog Devices is scheduled to release its earnings on February 16, so nothing is certain yet. However, estimates look promising — the Zacks Consensus Estimate is $1.79 per share, which would be an increase of 24.3% from the previous year. The company has also consistently beaten estimates in previous reports.
Most recently, it overshot its $1.69 per share earnings estimate by achieving $1.73 per share, resulting in a 2.37% gain — and the previous period saw it beat estimates by 6.83%. Its stock price is currently hovering around $161.03 after dipping from an all-time high of $188 in January, but this could change as results come in.
Axcelis Technologies (ACLS: NASDAQ)
Axcelis Technologies (ACLS)’s market cap of $2 billion means that it’s not a Fortune 500 company like the others on this list. However, its role in manufacturing materials for the semiconductor industry could mean that it will stand to benefit hugely from 5G.
The company also specializes in ion implantation systems, which are essential for processing the data involved in 5G. Like Analog Devices, Axcelis Technologies hasn’t yet revealed its earnings report for Q4, but this is expected to come at the start of February.
Its stock price has dropped down from where it was at the end of 2021, from $76.77 to $61.14. But could this be about to change? Some estimates believe earnings per share of $0.84 await Axcelis Technologies, and the firm has done a good job of outperforming its estimates in recent years. For instance, in Q3 of 2021, it achieved earnings of $0.81 per share compared to predictions of $0.71 per share.
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Tim Thomas has no positions in the stocks, ETFs or commodities mentioned.
This post was produced and syndicated by Tim Thomas / Timothy Thomas Limited.
Featured image credit: Pixabay.