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Strong Demand for Wireless Equipment Makers: 5 Top Picks

Zacks

U.S. stock markets have remained highly volatile so far this year. Trade related conflicts, yield curve inversion, geopolitical concerns and inflationary fears are primary reasons behind the market instability. However, the wireless equipment industry maintained its bull run even under these foreboding circumstances, surprising many investors.

A growing U.S. economy speeds up the demand for real-time voice, data, and video manifold. The escalation in demand has encouraged wireless service providers to undertake large network extensions while upgrading plans. This in turn has provided a boost to the demand for wireless equipment makers. Consequently, it will be a prudent move to invest in wireless equipment makers with a favorable Zacks Rank.

Strong Wireless Infrastructure Market

With rapid growth in video and other bandwidth-intensive applications, the wireless industry participants are making considerable investments in LTE, broadband and fiber in order to provide additional capacity and ramp up Internet and wireless networks. The LTE network has the highest penetration rate of 91% in the North American region. This in turn will help wireless equipment manufacturers.

The impending 5G boom is likely to propel the wireless industry to newer heights. The success of 5G technology hinges on substantial investments to upgrade infrastructure in the core fiber backhaul network to support anticipated growth in data services.

Advantage of 5G Wireless Network

Latency period of 5G data delivery will be in milliseconds. Further, 5G technology is designed to be more power efficient than any other standard wireless network available now. In fact, 5G-enabled mobile devices are likely to last a lot longer than their 3G or 4G counterparts.

The rising demand for technologically superior products has been a silver lining for the telecom space in an otherwise tough environment. In this respect, the superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of internet-connected devices, popularly known as Internet of Things (IoT).

U.S. Tariffs on Chinese Imports

Trump administration is deeply concerned about China’s drive to unseat the United States as the primary developer and supplier of products in the fields of high-tech artificial intelligence, semiconductors, quantum computing and various other digital technology driven sectors.

So far, the U.S. government has imposed tariffs worth of $250 billion on Chinese goods. Most of these products fall in high-tech industrial sectors. U.S. companies that rely on Chinese imports are unhappy about the move as it will raise prices of wireless equipment and several electronics products for the IT sector. However, a hike in product prices will certainly help wireless equipment manufacturers.

Our Top Picks

At this stage, it will be a wise decision to invest in wireless equipment manufacturing stocks with a favorable. We have narrowed our search on five such stocks each carrying either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows price performance of our five picks year to date.

LM Ericsson ERIC is a world-leading supplier in the telecommunications and data communications industry, offering advanced communications solutions for mobile and fixed networks and consumer products. It sports a Zacks Rank #1. The company has expected earnings growth of 159.6% for current year. The Zacks Consensus Estimate for the current year has improved by 47.4% over the last 60 days.

Ubiquiti Networks Inc. UBNT is engaged in the business of designing, manufacturing and selling broadband wireless solutions worldwide. It flaunts a Zacks Rank #1. The company has expected earnings growth of 11.7% for current year. The Zacks Consensus Estimate for the current year has improved by 19.8% over the last 60 days.

Arista Networks Inc. ANET is engaged in providing cloud networking solutions for data centre and cloud computing environments. It carries a Zacks Rank #1. The company has expected earnings growth of 37.8% for current year. The Zacks Consensus Estimate for the current year has improved by 5.5% over the last 60 days.

Motorola Solutions Inc. MSI is engaged in providing communication equipment, software and services. It carries a Zacks Rank #2. The company has expected earnings growth of 28.2% for current year. The Zacks Consensus Estimate for the current year has improved by 2.2% over the last 60 days.

Harris Corp. HRS is a leading technology innovator, solving customers' toughest mission-critical challenges by providing solutions that connect, inform and protect. It has a Zacks Rank #2. The company has expected earnings growth of 20.9% for current year. The Zacks Consensus Estimate for the current year has improved by 0.9% over the last 60 days.

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