What stocks do we see as good long-term buys versus stocks that you can swing right now? In a year, we're going to see a complete upgrade to 5G and when iPhone 12 is introduced, it will have 5G capability built-in.
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Why All the Hype Regarding 5G?
5G stands for “Fifth Generation Wireless Technology.” Every new generation has improved the quality of our wireless service. With every improvement, we've seen incredible advances in what our phones can do.
The new 5G network promises much higher performance. It's faster, has more data capacity, can reach devices in previously hard-to-reach places (inside buildings and basements), and opens up many more user experiences. 5G unlocks faster multiplayer gaming, shopping with augmented reality, real-time translation, and so much more.
How Fast is 5G?
5G speed will range from 50 Mbit under a gigabit per second. Right now, I have the fastest internet speed at 200 Mbps. 5G is literally 5x as fast. That's going to change the game for every online business, online company, as well as you and your experience watching movies and playing online games.
Funny story: I just had a memory from 2009 pop-up in my Facebook memories. I was so proud to upgrade from 2G to 3G when I got the new iPhone 3s. Think ahead to next year and you know that 5G will be the standard. Things are about to go to the next level.
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Who are The Big Players in 5G?
Who owns and leases the cell phone towers?
First, let's talk about the towers. Crown Castle owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. market.
Crown Castle trades under CCI and they just announced their quarterly dividend. Crown Castle International Corp. announced today that the quarterly dividend will be paid on Monday, August 3, 2020 to holders of record on July 15, 2020. The dividend will be paid in cash at a rate of $17.1875 per share of Preferred Stock.
I am going to buy and hold CCI.
Who's Leasing the Towers?
- AT&T (T)
- Verizon (VZ)
- T-Mobile (TMUS)
The top three mobile providers are going to be your 5G providers. AT&T (NYSE: T) is the 1st U.S. Carrier to Deploy a Standards-Based, Mobile 5G Network.
AT&T expects to reach nationwide 5G wireless service later this summer. The company anticipates 5G to drive revenue growth through customer device upgrades and then, bundling service to push revenue.
AT&T's revenue during the pandemic has risen from $13.6 billion to $14 billion over the last year. That's four quarters of growth and freed up about $4 billion in cash. That will come into play when they are trying to pay off the debt they assumed when they acquired Time Warner.
Combine 5G with AT&T's streaming service, like HBO Max, and AT&T seems like a solid buy & hold stock. And the stock pays a $0.51 cent dividend and is currently trading under $30. Target price: $38.
Then, who owns the market share right now? Based on last quarter 2019, Ericsson is the top vendor in mobile core network with 26% of the market share followed by Huawei with 25%, Nokia with 15%, ZTE with 10%, and Cisco with 7%.
Who's Making the Cell Phones?
Gartner is the world's research company and forecasts 5G-enabled mobile phone shipments will grow from 11% of total phone shipments this year to over 40% in 2022.
What companies are in play? Let's take a look at last year's numbers…
Worldwide Smartphone Sales to End Users by Vendor in 3Q 2019 (Thousands of Units)
|Vendor||3Q19Units||3Q19 MarketShare (%)||3Q18Units||3Q18 MarketShare (%)|
Apple (NASDAQ: AAPL) iPhones make up 55% of Apple's entire revenue. Apple recently stated that the iPhone 11 was its best-selling model throughout the entire 4th quarter. When the iPhone 12 with 5G comes out, that should boost its sales again in 2021.
My recommendation: Buy the Dip & Hold Apple (Target: $438)
UPDATE: If you got in this trade during this call-out, Apple went above $500 and then, did a 1:4 split. For every stock you owned, you got four and the price reset at $100. It's now trading at $120.
Who's Making the Chips for the Cell Phones?
Last year, Apple & Qualcomm were in a costly lawsuit. Qualcomm (NASDAQ: QCOM) attempted to get iPhones banned from Apple's key markets over patent infringements. Apple finally relented and quickly formed a six-year patent licensing deal.
The deal also means that Qualcomm can supply Apple with chips for their iPhone 12. That could result in a $3 billion dollar boost to Qualcomm. That puts their stock on pace to hit $110 by next summer.
Shares of Qualcomm are trading below $90 right now. Target Price: $110
Second, Marvell (NASDAQ: MRVL) recently had a major design win with Samsung to provide chips to power LTE and… 5G base stations. With Samsung holding a major market share of the phones being sold, we recommend MRVL as a buy and hold. It's currently trading around $33 and just declared a $0.06 quarterly dividend.
Target Price: $40
Third, Ericcson (NASDAQ: ERIC) is another leader in the 5G space holding 54,000 patents and 100 licensing agreements, including the patent dispute that was settled in 2015.
During that dispute, the companies will develop the next generation 5G cellular standards and optimize the existing wireless networks for the benefit of operators and users worldwide, and video traffic optimization.
Ericcson is trading at an all-time high at $9.27. We recommend trading ETF's who have combined all the 5G stocks into one.
UPDATE: If you got in at the $9.27, you're now looking at a 40.23% increase. It might be time to lock in profits.
What ETF Trades 5G Stocks?
The first 5G ETF is trading under stock symbol: FIVG
|Percentage Of Net Assets||Name||Identifier||Shares Held||Market Value|
|5.20%||NXP SEMICONDUCTORS N V||NXPI||157,441||17,849,086.17|
|4.93%||ANALOG DEVICES INC||ADI||140,935||16,926,293.50|
|2.96%||KEYSIGHT TECHNOLOGIES INC||KEYS||101,081||10,147,521.59|
|2.95%||AMERICAN TOWER CORP||AMT||39,845||10,134,974.20|
|2.86%||VERIZON COMMUNICATIONS INC||VZ||180,858||9,816,972.24|
Right now, I'm swing trading ETF's for quick profits.
Current trading price: $24.58 (Updated Price: $30.87)
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