My Favorite 5G Stock
I started getting my Wealth Advisory subscribers positioned for the 5G rollout a couple years ago. After all, this is one of the biggest and most obvious catalysts for profitable investing we have on the horizon. Better than autonomous cars, somewhat less than cloud migration.
One of my first recommendations was my favorite Finwegian company: Nokia (NYSE: NOK).
Me and Nokia go way back. It was among the first stocks I really delved into back in 1998 when I started in this biz — convinced my mom and my brother to get in, and we all made some loot.
Up until 2007, Nokia was still the biggest mobile phone company in the world, pretty amazing when you think about it. Apple stole had the vision to roll into that market and was rewarded with a $1.4 trillion (!) valuation while Nokia teeters on the brink of becoming completely irrelevant.
I got bullish on Nokia again when it made a splash into networking equipment when it acquired Alcatel-Lucent in 2015. That made it the biggest wireless equipment company in the world. I figured it was a slam dunk to lead the 5G migration. That's also when I started up with the "Finwegian" thing.
It began as a term of endearment. And I retired it about a year ago out of respect for a company that I really wanted to push. But I've resurrected it as a term of derision because the company has flailed in maintaining its 5G market advantage so thoroughly.
And, it's ironically appropriate to muddle its country of origin, Finland, with Norway because it's as if Nokia has completely lost touch with its roots and its identity.
The U.S. banned Nokia's biggest competition (Huawei) and it's still so far behind that it cancelled its dividend to invest more in 5G tech.
It is so bad that Deutsche Telekom recently had to tell Nokia to get its %$^& together if it wanted any shot at getting deployment contracts in Germany. And a couple weeks ago, U.S. AG Barr actually said the U.S. was considering taking a stake in Nokia to help push its product development.
The dividend was the last straw for me and my Wealth Advisory partner Jason Williams. We recommended selling the stock last November. And I'm glad we did because we remain focused on a couple 5G stocks that will be big winners...
The #1 5G Stock Is...
If you're looking at 5G investments, you simply have to own Qualcomm (NASDAQ: QCOM). Due to its forward-thinking development and patent protection, it is expected that QCOM will have a chip in every single 5G device in the world. That's incredibly bullish...
Jason and I added it to the Wealth Advisory portfolio in April of 2017 at $51 a share. The stock is currently around $90, and it's still cheap with a forward P/E of 14.
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The only threat I see to Qualcomm's dominance is from China. I can't help but think there's a decent chance that all this China trade deal stuff is just window dressing... that when push comes to shove, China will simply ignore U.S. patents in order to push its own companies.
China has never really endorsed the spirit of the WTC. And I don't think trade talks have really held its feet to the fire. China talks, makes a lot of assurances, and then does what it wants. That market opportunity carrot keeps multinationals looking at the upside.
I don't know exactly how to discount this threat. To me, China telling the world to sod off is a black swan event that is still just beyond most investors' consciousness. I watch the progression of China's surveillance state as a rough timeline for when the shi swan could hit the fan...
So any 5G investor worth his or her salt should have a 5G stock that is only exposed to the U.S. market, so that it is immune to whatever China may or may not do. And I've got just the stock for you...
The Missing 5G Link
Most 5G investment analysis is gonna focus on the chips or the antennas. These are the sexy stories. Nobody really wants to talk about what may be the most significant demand from the new high-speed networks: the backbone.
Okay, so we can finally ramp up the speed of wireless service. We can finally increase the amount of data that can be transmitted. And server farms are rapidly expanding to store all that data. But, how exactly does all that data find its way to a cell tower in order to get broadcast to your phone or laptop?
Yeah, good question, right? Well, it's one that few are asking and even fewer are answering.
I'm talking about the network backbone, the data superhighway. And I'm recommending one small company to my Wealth Advisory subscribers that has a stranglehold on much of America's fiber backbone.
I say it's a small company, but that's only true right now and probably only for a short time. Once investors really start seeing how all this data gets around, they're going to find this little undiscovered gem of a company...
And that's when they'll discover that all of the wireless carriers and pretty much every big name in communication already have contracts in place with this company. Quite simply: It owns more fiber networks than anyone else in the country. It is the critical piece for winning the race to deploy 5G.
That discovery process may be starting right now. Last week, the stock ramped up 13% in one day as buyers flooded in. You'll need to move fast if you want to catch this company while it's still under $10 a share.
Fortunately, it's a holiday. So you have plenty of time to check out my presentation on this unique opportunity and be ready when the market opens tomorrow at 9:30 a.m. EST.
Here's the secure link, and you're welcome.
Until next time,
A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.
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