Communication has entrenched itself deeply within the fabric of our daily existence. Whether we’re engrossed in a high-speed broadband connection, shooting off a quick text, or attending a voice mail, our dependence on these channels is unmistakable. Driving this transformative wave are companies building the infrastructure and trailblazing new technological avenues. Given their instrumental role, it’s only fitting that we shine a light on select communication stocks to buy for potential growth.
However, 2023 hasn’t been all roses. Amidst rising costs of living and a dip in consumer spending, the telecom sector faces headwinds. Yet, with the imminent 5G revolution and forecasts of a $34.3 billion 5G Test Equipment Market by 2031, according to Transparency Market Research, these challenges also unveil unparalleled opportunities for savvy investors.
Moreover, with U.S. advertising on a resurgence and Washington’s readiness to bolster internet providers, optimism is in the air. The terrain of communication stocks still holds promising treasures for the keen-eyed investor.
Verizon (VZ)
The White House’s recent allocation of $42 billion to achieve universal high-speed broadband access by 2030 bodes well for Verizon (NYSE: VZ). This considerable investment presents a golden opportunity for the telecom stalwart to expand its broadband customer base further. Their efforts already seem to be paying off; driven in part by enticing low-cost 5G plans, Verizon reported a net addition of over 400,000 customers last quarter—impressively, their third consecutive quarter achieving this feat.
Moreover, TipRanks analysts forecast a notable 19% surge in Verizon’s stock price. Additionally, financial powerhouse Citi (NYSE: C) recently elevated VZ stock to a “buy.” They highlighted reasons, including the stabilization of the broadband wireless sector, a particularly appealing valuation, and a rise in free cash flows.
Furthermore, VZ stock currently trades at a compelling forward price-earnings ratio of just seven. Add to this a generous dividend yield of 7.8%, and Verizon emerges as a company with robust financial health and a promising trajectory in the telecommunications arena.
Alphabet (GOOG, GOOGL)
The U.S. advertising sector is undergoing a remarkable resurgence, driven by optimism and compelling data. According to Ad Age, 2023 is expected to see a 5% increase in spending, followed by an even more significant 8.1% surge in 2024. Among the frontrunners, Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL) shines brightly, demonstrating impressive financial prowess and promising growth for savvy investors.
Its recently unveiled $74.6 billion revenue, marking a robust 7% year-over-year rise, didn’t just meet expectations, it leaped past them by a hefty $1.85 billion. Moreover, its second-quarter earnings per share dazzled, beating the mark by 10 cents. With prominent advertisers increasingly gravitating towards Alphabet’s platforms like Google and YouTube, it’s no surprise they’re the talk of the town.
Adding to the optimism, Needham’s investment experts shine a spotlight on Alphabet’s AI dominance, while Wedbush’s Dan Ives envisions the AI wave propelling Google Cloud to new heights. Together, they underscore a promising outlook for Alphabet’s future.
Ciena Corp (CIEN)
Ciena Corp. (NYSE: CIEN) stands tall in the U.S. digital landscape. Recognized as the “world’s premier force in optical connectivity,” its innovative equipment threads high-speed internet across vast cities and diverse communities. Therefore, it comes as no wonder that giants like AT&T (NYSE: T) and Verizon (NYSE: VZ) turn to it for its networking prowess.
Moreover, with the U.S. government planning to pump billions into fortifying the country’s fiber optic infrastructure, Ciena’s prospects appear even brighter. 2022 witnessed the company raking in a robust $1.07 billion in revenue, a commendable 23% jump year-over-year. While there are over 8,000 employees behind this success, the company’s mantra to innovate and adapt truly sets it apart.
Despite a 7% dip in CIEN stock this year due to 5G concerns, Ciena’s resilience shines. It has seized opportunities in the surging cloud computing sector, outperforming Wall Street’s expectations. Impressively, TipRanks analysts predict a promising 21% upside potential, making Ciena an intriguing player with a proactive stock repurchase strategy. It makes it one of those communication stocks to buy.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines