10 Best 5G Stocks to Watch for the Rest of 2021

The global 5G technology market size is expected to exceed $700 billion in valuation by 2025, according to Market Research Future (MRFR).

Here are the 10 best-rated stocks that have 5G exposure, according to Wall Street analyst rating scores compiled by StreetInsider.com.

10. T-Mobile US (NASDAQ: TMUS) - Analyst Ratings Score 8.2

Wireless carrier T-Mobile US has an analyst rating score of 8.2/10 with an average price target of $156.24. Overall Rating on TMUS is “Buy”. The 5G exposure was cited as a key driver that pushed Benchmark analyst Matthew Harrigan to raise the price target on TMUS to $200.00 (from $187.00) while maintaining a “Buy” rating.

"We are increasing our price target on Buy rated T-Mobile to $200 from $187 off favorable equity market conditions. This is prior to any further 5G benefits beyond 5-year management guidance. We also introduce a new valuation matrix off customer activity in TMUS’s wheelhouse urban markets alongside pricing power. Although there are headwinds from promotions and device subsidies at AT&T and Verizon Wireless, T-Mobile is apt to benefit as a net share gainer off more normalized 2H21 consumer switching activity. Other 2H21 positives include Magenta MAX unlimited data momentum and improved Sprint legacy churn."

9. SBA Communications (NASDAQ: SBAC) - Analyst Ratings Score 8.0

Tower company SBA Communications has an analyst rating score of 8.0/10 with an average price target of $330.56. Overall Rating on SBAC is “Buy”. Earlier this month, Morgan Stanley analyst Simon Flannery upgraded SBA Communications from Equal-weightt” to “Overweight” with a price target of $337.00 (from $321.00).

"We upgrade SBAC to Overweight as the company with the highest exposure to domestic tower leasing and relative valuation upside; our $337 price target has 11% potential upside. We note that SBAC's valuation premium to peers has fallen from >20% to near parity,a trend we expect to reverse as the leasing cycle accelerates. We also remain Overweight CCI with ~10% total returns supported by a ~3% dividend yield and constructive 2022guidance likely coming in October. We also see upside for AMT, but their heavier international business mix and upcoming Sprint churn somewhat dilutes their near-term leverage to 5G capex acceleration in the US market relative to peers."

8. Cambium Networks (NASDAQ: CMBM) - Analyst Ratings Score 8.0

Wireless infrastructure product provider Cambium Networks has an analyst rating score of 8.0/10 with an average price target of $63.17. Overall Rating on CMBM is “Buy”. Earlier, Goldman Sachs analyst Rod Hall upgraded Cambium Networks from “Neutral” to “Buy” with a price target of $56.00.

“Cambium reported Q4 revenue 8% higher than our estimate, and went on to guide Q1 revenue 14% higher. FY’21 revenue guidance is 8% higher, despite baking in some conservatism from silicon supply constraints in H2’21. Better gross margins and good OpEx control drove EPS significantly higher than our estimate, as the company posted its third consecutive quarter of strong execution. We note that Cambium is seeing strong momentum in its PMP segment, even as the Wi-Fi segment is also expected to rebound strongly in 2021. With new products including the 60 GHz cnWave series aimed at addressing urban markets seeing strong initial traction, we believe Cambium has better visibility to achieve solid multi-year revenue growth.”

7. American Tower (NYSE: AMT) - Analyst Ratings Score 7.7

Cell tower owner American Tower has an analyst rating score of 7.7/10 with an average price target of $276.21. Overall Rating on AMT is “Buy”. Recently, Jefferies analyst Jonathan Petersen outlined AMT as a top pick among the tower stocks as it trades at a discount to its peers.

"We believe the discount is due primarily to the higher Sprint churn in 2021/22 (SBAC & CCI Sprint maturities don't begin until 2023+); however, we like that AMT is getting the churn behind it (and it seems already priced in), setting the company up for stronger growth in future years. Additionally, accretion from the Telxius portfolio should drive upside to street estimates.”

6. Ciena Corporation (NYSE: CIEN) - Analyst Ratings Score 7.2

Communications equipment provier Ciena has an analyst rating score of 7.2/10 with an average price target of $61.40. Overall Rating on CIEN is “Buy”. In June, Jefferies analyst George Notter raised the price target on CIEN to $70.00 (from $62.00) after April results and guidance point to an end-market where Tier 1 Service Providers are coming back from COVID-induced challenges.

"They now have “great” visibility into the back half of the year. Of course, Ciena previously caveated their commentary about forward-looking expectations by saying that order growth and backlog expansion was a necessary item for the company to hit full year expectations. Now, they’re seeing it. Also, they noted that the current semi supply chain shortages aren’t really driving customer ordering behavior (i.e., with longer-dated product deliveries)."

5. Marvel Technology (NASDAQ: MRVL) - Analyst Ratings Score 7.1

Semiconductor maker Marvel has an analyst rating score of 7.1/10 with an average price target of $55.91. Overall Rating on MRVL is “Buy”. Summit Insights upgraded MRVL to “Buy” from “Hold” earlier in June as “industry dynamics are turning favorable driven by cloud, enterprise, and carrier spending strength.”

“Our industry checks indicate a strong return in cloud spending, N.America 5G carrier ramp, and enterprise networking recovery to benefit MRVL in 2H21 and possibly through 2022. Additionally, we believe MRVL's new design wins will carry a higher ASP as well as a higher gross margin compared to its existing designs. Furthermore, we expect the industry supply constraint to improve significantly through 2H21, which gives MRVL more potential for further upside.”

4. Qorvo (NASDAQ: QRVO) - Analyst Ratings Score 7.1

Semiconductor maker Qorvo has an analyst rating score of 7.1/10 with an average price target of $202.33. Overall Rating on QRVO is “Buy”. In May, Needham & Company analyst Rajvindra Gill raised the price target on Qorvo to $245.00 (from $220.00) while maintaining a “Buy” rating.

"We are raising our price target to $245 following a strong beat and raise quarter. Mobile Products continues to be driven by 5G handset content increases and expected higher volumes in CY21. Infrastructure & Defense is expected to see a better 2H21 after a slower 1H start, with more MIMO deployments in the US expected. Utilization is expected to rise over the year, which will help sustain margins. Unlike several of its competitors, QRVO provided annual revenue guidance of 15% Y/Y (above our 3% est, Street's 9%), gross margin of 52% and OPEX <20%. We are increasing our PT to $245 on a 50/50 blend of P/E and EV/EBITDA."

3. Skyworks Solutions (NASDAQ: SWKS) - Analyst Ratings Score 6.8

Semiconductor company Skyworks Solutions has an analyst rating score of 6.8/10 with an average price target of $202.00. Overall Rating on SWKS is “Buy”. Raymond James analyst Chris Caso recently hiked the SWKS price target to $220.00 per share from the prior $205.00 per share, despite a move lower in shares following the latest quarterly earnings report.

“The stock reaction after hours suggests investors weren't sufficiently impressed with guidance for what's typically the seasonally weakest quarter, though that guidance was above consensus. But what we think is important is the seasonally stronger 2H, when their largest customer Apple ramps. We think consensus estimates are simply too low for 2H after accounting for iPhone unit growth, SWKS content growth and legacy content growth, and believe FY22 estimates could rise by more than $1 billion in revenue and $2 in EPS on more realistic numbers.”

2. Analog Devices (NASDAQ: ADI) - Analyst Ratings Score 6.8

Semiconductor company Analog Devices has an analyst rating score of 6.8/10 with an average price target of $175.18. Overall Rating on ADI is “Buy”. BofA Securities analyst Vivek Arya raised the price target on Analog Devices to $200.00 (from $178.00) after having discussions with CFO, Prashanth Mahendra-Rajah.

"ADI’s “pure-play” status in one of the most desirable parts of the semi industry (analog, that has 70%+ GM, 40%+ EBIT%); multiple product cycles and FCF enhancement justify a premium valuation, and we raise our PO to $200 from $178, on higher 29x FCF multiple vs 25x prior. Note S&P500 Industrials generate only 13% avg. FCF (vs. ADI’s 36%) but trade at 24x FCF, and in our view ADI can generate much more profitable growth."

1. Apple (NASDAQ: AAPL) - Analyst Ratings Score 6.4

iPhone maker Apple has an analyst rating score of 6.4/10 with an average price target of $152.91. Overall Rating on AAPL is “Buy”. Morgan Stanley analyst Katy Huberty recently reiterated her bullishness on AAPL by noting, among other things, that the 5G adoption is still in the early stages.

“First, during past "s" cycles iPhone replacement cycles extended by ~0.8 years which is an unreasonable scenario given the starting point of 3.7 years today, which is already well ahead of notebook replacement cycles. Second, Apple recently expanded trade-in, financing, and installment offers which improve iPhone affordability relative to past "s" cycles when like for like prices increased. With the help of these programs, many existing iPhone users are opting to purchase more expensive devices which is lifting ASPs and margins, a trend that feels sustainable given the strength of consumer balance sheets heading into FY22. Third, 5G adoption is still in the early stages, at 9% installed base penetration globally and 11-21% across Apple's two largest markets (the US and China).”

Q&A

Q: What company will dominate 5G?

A: According to Wall Street analyst ratings compiled by StreetInsider, the top three-rated stocks that have 5G exposure are: T-Mobile US (NASDAQ: TMUS), SBA Communications (NASDAQ: SBAC), and Cambium Networks (NASDAQ: CMBM).

Q: What is the cheapest 5G stock to buy?

A: According to StreetInsider’s list of Best 5g stocks to watch in 2021 (based on Wall Street analyst ratings score), the cheapest 5G stock to buy is Cambium Networks ($49.98 per share).

Q: Will 5G stocks soar?

A: The 5G market is expected to reach $700 billion in valuation by 2025, according to Market Research Future (MRFR). Wall Street analysts have these three 5G stocks as top-rated: T-Mobile US (NASDAQ: TMUS), SBA Communications (NASDAQ: SBAC), and Cambium Networks (NASDAQ: CMBM).

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