These stocks belong to companies that are either directly involved in developing and deploying 5G technology or are set to benefit significantly from its widespread adoption. This includes major telecom operators, equipment manufacturers, and smaller firms specializing in critical components like semiconductors, antennas, and network solutions.
As the broader indices like the S&P 500 and the Nasdaq continue to move higher, the valuations of these companies will follow suit, making them formidable investments.
Here are three hidden-gem 5G stocks for investors to consider.
Jabil (JBL)
Jabil (NYSE:JBL) is a manufacturing services company that operates in various segments, including electronics manufacturing services (EMS) and diversified manufacturing services.
I think now is the right time to buy JBL stock despite a softening outlook released by management. The company anticipates Q1 fiscal 2024 revenue to be between $8.3 billion and $8.4 billion, slightly below its prior range. The core earnings per share for the quarter are expected to hit near the midpoint of the previously provided range. The revenue forecast for Q2 is set between $7.0 billion and $7.6 billion.
But there are some positives to this adjustment. The company expects to deliver more than $1 billion in adjusted free cash flow for the year and will continue to roll out its share repurchase program.
Analysts also remain bullish on JBL’s prospects, forecasting an 18.25% increase in its EPS and a 4.21% increase in its top-line revenue.
JBL’s stock price is up 66.50% over the past year, and I believe its momentum is strong enough to carry it through despite its short-term headwinds.
Ericsson (ERIC)
Ericsson (NASDAQ:ERIC) is a global leader in telecommunications services and equipment and supplies crucial infrastructure to the 5G industry.
While inflation remains high worldwide, ERIC stock has faced some headwinds, but it is executing a strategy to cut back on costs and grow its enterprise and mobile segments. The company’s Q3 results align with this direction, showing an EBITA margin of 7.3% and efforts to reduce sensitivity to market mix and volume changes.
It should be noted that investing in ERIC is a contrarian one, as it suffers from a 23% year-over-year decline in network sales in Q4 2023.
By some accounts, analysts would expect this to be a negative sign, but I’m of the opposing view. When companies have excessive costs, as in the case of ERIC, with a modest operating margin of 9.87%, this can prompt internal changes. This can include layoffs, which lead to a sleeker and more refined business model, and companies that lay off staff often outperform in subsequent quarters.
ERIC has negative accounting profits, but its price-to-sales ratio is just 0.71, which indicates that it’s significantly undervalued with respect to the efforts it has made so far to increase its margins.
Corning (GLW)
Corning’s (NYSE:GLW) optical communications segment, which manufactures fiber optic cables and related equipment, is crucial for the rollout of 5G networks.
I feel that now is a good time to invest in GLW stock if investors want to pick up cheap shares in the company. For the first quarter of 2024, Corning anticipates core sales to be approximately $3.1 billion, with core EPS expected to range from $0.32 to $0.38. This projection positions the first quarter as potentially the lowest of the year.
The company is also expected to see strong earnings growth of around 17% YoY in 2024.
Like the other hidden-gem 5G stocks on this list, GLW appears undervalued, as it trades at just 2.17 times sales, and Wall Street rates it as a “Buy.”
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.