5G is the new wireless standard that promises ultra-fast, low-latency wireless communications that will usher in a new era of futuristic technology applications. While 4G brought with it the era of “application” on smartphones, 5G is poised to usher in a new era of futuristic technologies such as the Internet of Things, autonomous cars, augmented and virtual reality, along with other applications that we cannot even contemplate today.
5G has even become a core geopolitical issue, with the United States and China vying to build their 5G infrastructures to spur growth and advance next-generation technology. As such, 5G is a very hot topic. And yet, there are still quite a few high-quality 5G-related stocks trading at reasonable prices today.
Three of the best-positioned 5G stocks still trading at attractive valuations include wireless service provider T Mobile (NASDAQ: TMUS), a leading chip maker Taiwan semiconductor manufacturing (NYSE: TSM)and a giant memory chip Micron technology (NASDAQ: MU), all of which look like solid 5G games to add to your wallet this summer.
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T-Mobile: The best network at the lowest price?
If a company were to offer you a superior product at a lower price, could something make it go with a competitor? Probably not, which is why T-Mobile looks so compelling today.
For years, T-Mobile was the laggard of the network behind the wireless giants. AT&T (NYSE: T) and Verizon (NYSE: VZ), but it was still a winning action. By establishing itself as the “Un-carrier” insurgent, T-Mobile campaigned for lower prices and customer-friendly features, such as unlimited data, eliminating all hidden fees and taxes, and free Netflix (NASDAQ: NFLX) on certain plans. That spirit enabled T-Mobile to gain market share and reduce its turnover to industry-leading levels.
However, T-Mobile’s true advantage today comes from its recently closed merger with Sprint. While Sprint has been a laggard in the industry, it also brought with it a valuable 2.5 GHz spectrum, on which T-Mobile is building its 5G network. In fact, the combined company now has a superior 5G spectrum portfolio than Verizon and AT&T, which it started implementing last December.
Although Verizon still has the speed crown in the 5G race, it has very little coverage. Meanwhile, according to the latest Opensignal report, T-Mobile wins the crown for 5G. availability by a large number. That study confirmed previous findings from Rootmetrics, which found that T-Mobile had the highest maximum 5G availability, at 57.1% in Washington, DC Sprint, now part of T-Mobile, came in second, with 45.7% availability in Dallas. Competitor AT & T’s maximum 5G availability was just 9.5% in Indianapolis, and Verizon’s high-speed 5G was only available 3.1% of the time in the Chicago market.
Meanwhile, T-Mobile continues to accumulate net additions. In early June, the company previously announced between 800,000 and 900,000 net additions in the June quarter, compared to the previous guidance of 0 to 150,000. Management observed a better-than-expected recovery from the coronavirus, as well as better performance in its business offerings, where it has very little market share.
T-Mobile’s superior network and “Un-carrier” mantra should enable it to have a significant market share in the 5G era, making the stock a smart buy today.
Taiwan Semiconductor has manufacturing leadership
To achieve the full benefits of 5G, many different technologies will have to work together. There are modems inside 5G phones, which may be made by Qualcomm (NASDAQ: QCOM), which must communicate with 5G radios that may contain acceleration systems on chips manufactured by Xilinx (NASDAQ: XLNX). These radios can be reconnected to an edge or cloud data center, which are packed with high-powered graphics processing units (GPUs) of Nvidia (NASDAQ: NVDA) or central processing units (CPUs) designed by Advanced micro devices (NASDAQ: AMD).
But my next 5G purchase isn’t any of these stocks. Rather, the next choice is casting. all These chipmakers depend on their manufacturing: Taiwan Semiconductor Manufacturing.
Taiwan Semi does not manufacture its own chips, but only manufactures them for external chip designers. This “pure” cast model has its benefits. Taiwan Semi customers can focus on design and not have to worry about expensive and difficult manufacturing processes. Meanwhile, by serving a wide range of chipmakers, Taiwan Semi increases its manufacturing expertise. That has been worth it in recent years, as Taiwan Semi pre-empted its competitors as the first foundry to produce a 7nm chip. And TSM is not slowing down; We’re already starting to speed up your 5nm process as we speak (in the semiconductor world, the smallest nanometers indicate a denser, more powerful chip).
Another reason to love Taiwan Semi over individual chip makers is that no matter which chip company wins the 5G race, Taiwan Semi is likely to produce the winning chip. As an example, TSM said that even if US export controls make TSM unable to produce chips for big customer Huawei, TSM would have no problem replacing that demand. And that’s no small feat: Huawei’s HiSilicon division accounts for about 20% of TSM’s orders.
Taiwan Semi has become so strategically important that the United States government is even paying the manufacturing giant to build new manufacturing plants in Arizona. These government subsidies will help keep Taiwan Semi’s costs at the level of its Taiwan operations, and allow it to increase the capacity of American customers in the 5G era.
Even despite the headwinds of COVID-19, the TSM administration recently forecast revenue growth for middle-to-high teens this year, as demand for their 5G experience overwhelms concerns of a slowdown induced by a pandemic. Trading at just 22 times this year’s profit estimates, 19.3 times next year’s profit estimates, and paying a hefty 2.9% dividend, Taiwan Semi seems like a solid 5G move for performance-hungry investors. in July.
Micron Technology has all the chips
Finally, all 5G phones will need much more DRAM and NAND flash memory on them, so that users can reap the rewards of 5G speeds and next-gen apps. That should benefit Micron Technology, which produces both products. In fact, Micron is one of only three companies that produce more than 90% of the world’s DRAM, and one of the top six companies that make NAND flash, apart from smaller Chinese startups.
Micron has just reported impressive recent quarterly results as data centers, games and especially 5G phones were able to keep up with demand even in the face of the COVID-19 recession. Micron was even able to increase mobile bit shipments as the smartphone industry struggled. This is because 5G phones, even on the low end, are hitting the market, and they are packed with roughly twice the amount of DRAM and NAND content as 4G phones.
Meanwhile, Micron guided sequential revenue and earnings growth for the current quarter, meaning the memory maker may be on the brink of an upward industry cycle. The last time it happened, this cyclical business increased earnings for nine consecutive quarters. At just 1.5 times the book value and 10 times the earnings estimates for 2021, Micron remains one of the cheapest 5G stocks out there today.
