3 Wireless Stocks Likely to Transcend Industry Shortcomings

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The Zacks Wireless Equipment industry is plagued by large-scale investments for seamless 5G migration, eroding profits due to escalated price wars, high customer inventory levels and inflated raw ...

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Moreover, a challenging macroeconomic environment, prolonged geopolitical conflicts and uncertain business conditions continue to weigh on margins. However, the transition to cloud and fiber network infrastructure upgrades should help the industry in the long run.Despite short-term headwinds, Qualcomm Incorporated QCOM, Ericsson ERIC and InterDigital Inc. IDCC are likely to profit from a vast proliferation of IoT, increased fiber densification and a gradual shift to cloud services and 5G technology.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4575":"芯片概念","IVV":"标普500指数ETF","QCOM":"高通","SPY":"标普500ETF","BK4020":"通信设备","OEX":"标普100","BK4527":"明星科技股",".SPX":"S&P 500 Index","LU1035775433.USD":"AB SICAV I - AMERICAN GROWTH PORTFOLIO \"AD\" (USD) INC","SDS":"两倍做空标普500ETF","BK4588":"碎股","BK4550":"红杉资本持仓","UPRO":"三倍做多标普500ETF","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","LU1917777945.USD":"安联专题基金Cl AT Acc","LU2247934214.USD":"FIDELITY FUNDS SUSTAINABLE FUTURE CONNECTIVITY \"A\" (USD) ACC","SPXU":"三倍做空标普500ETF","SSO":"两倍做多标普500ETF","SG9999015952.SGD":"LIONGLOBAL DISRUPTIVE INNOVATION \"I\" (SGD) ACC","LU1119994496.HKD":"FIDELITY WORLD \"A\" (HKD) ACC","LU0079474960.USD":"联博美国增长基金A","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","BK4573":"虚拟现实","BK4561":"索罗斯持仓","LU2106854487.HKD":"ALLIANZ THEMATICA \"AMG\" (HKD) INC","IDCC":"InterDigital","BK4581":"高盛持仓","BK4512":"苹果概念","ERIC":"爱立信","BK4504":"桥水持仓","LU1823568750.SGD":"Fidelity Global Technology A-ACC SGD","SH":"标普500反向ETF","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU1084165304.USD":"FIDELITY WORLD \"A\" (USD) ACC","LU1261432733.SGD":"Fidelity World A-ACC-SGD","SG9999015945.SGD":"LionGlobal Disruptive Innovation Fund A SGD","LU1069344957.HKD":"AB SICAV I - AMERICAN GROWTH PORTFOLIO \"AD\" (HKD) INC","SG9999015986.USD":"LIONGLOBAL DISRUPTIVE INNOVATION \"I\" (USD) ACC","BK4554":"元宇宙及AR概念","SG9999015978.USD":"利安颠覆性创新基金A","BK4515":"5G概念","BK4532":"文艺复兴科技持仓","VOO":"Vanguard标普500ETF","BK4585":"ETF&股票定投概念","LU0868494617.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD) ACC","OEF":"标普100指数ETF-iShares","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","BK4534":"瑞士信贷持仓","LU1046421795.USD":"富达环球科技A-ACC"},"translate_title":"3只可能超越行业缺点的无线股票","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"QCOM":1,"ERIC":1,"IDCC":0.9,"VOO":0.71,"SPY":0.71,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,"UPRO":0.6,"ESmain":0.6,"IVV":0.6,".SPX":0.6},"content_text":"The Zacks Wireless Equipment industry is plagued by large-scale investments for seamless 5G migration, eroding profits due to escalated price wars, high customer inventory levels and inflated raw material costs. Moreover, a challenging macroeconomic environment, prolonged geopolitical conflicts and uncertain business conditions continue to weigh on margins. However, the transition to cloud and fiber network infrastructure upgrades should help the industry in the long run. Despite short-term headwinds, Qualcomm Incorporated QCOM, Ericsson ERIC and InterDigital Inc. IDCC are likely to profit from a vast proliferation of IoT, increased fiber densification and a gradual shift to cloud services and 5G technology.\nIndustry Description\nThe Zacks Wireless Equipment industry primarily comprises companies providing various networking solutions, wireless telecom products and related services for wireless voice and data communications through scalable modular platforms. Their product portfolio encompasses integrated circuit devices (chips) and system software for wireless voice and data communications, analog and digital two-way radio, satellite telecommunications, wireless networking and signal processing and end-to-end enterprise mobility solutions. The firms also provide a broad range of routing, switching and security products, video surveillance and machine-to-machine communication components that secure VPN appliances, enable intrusion detection and thwart data theft. Some firms even provide electronic warfare, avionics, robotics, advanced communications and maritime systems to the defense industry.\nWhat's Shaping the Future of the Wireless Equipment Industry?\nDemand Erosion: Efforts to offset substantial capital expenditure for upgrading network infrastructure by raising fees have persistently reduced demand, as customers tend to switch to lower-priced alternatives. Moreover, the high technological obsolescence of most products has escalated operating costs, with steady investments in R&D becoming necessary to fend off competition. Due to a challenging macroeconomic environment and intense market volatility, high customer inventory levels pose another headwind for the companies.Fiber, Cloud Networking Traction Act as Tailwinds: To maintain superior performance standards, there is a continuous need for network tuning and optimization, which creates demand for state-of-the-art wireless products and services. Moreover, a faster pace of 5G deployment is expected to augment the telecommunications industry's scalability, security and universal mobility and propel the wide proliferation of IoT. Expansion of fiber optic networks to support 4G LTE and 5G wireless standards, as well as wireline connections, are likely to act as tailwinds. The industry participants are facilitating its customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible automation through steady infrastructure investments. The exponential growth of cloud networking solutions is further resulting in increased storage and computing on a virtual plane. As both consumers and enterprises use the network, there is tremendous demand for quality networking equipment.Short-Term Profitability Compromised: Although high infrastructure investments will eventually help minimize service delivery costs to support broadband competition and wireless densification, short-term profitability has largely been compromised. Margins are likely to be affected by the high cost of first-generation 5G products, U.S.-China trade tensions with the re-election of President Trump, the prolonged Russia-Ukraine war and the Middle-East tensions. Uncertainty regarding chip shortage (albeit to a lesser extent) and supply-chain disruptions leading to a dearth of essential fiber materials, shipping delays and scarcity of other raw materials due to geopolitical unrest are expected to affect the expansion and rollout of new broadband networks. Extended lead times for basic components are also likely to hurt the delivery schedule and escalate production costs.\nZacks Industry Rank Indicates Bearish Trends\nThe Zacks Wireless Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #161, which places it in the bottom 35% of more than 250 Zacks industries. The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Before we present a few wireless equipment stocks that are well-positioned to outperform the market based on a strong earnings outlook, let’s take a look at the industry’s recent stock-market performance and valuation picture.\nIndustry Outperforms S&P 500, Sector\nThe Zacks Wireless Equipment industry has outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector over the past year.The industry has surged 52.3% over this period compared with the S&P 500 and sector’s growth of 36% and 40.3%, respectively.One-Year Price Performance\n\nIndustry's Current Valuation\nOn the basis of trailing 12-month Enterprise Value-to EBITDA (EV/EBITDA), which is the most appropriate multiple for valuing telecom stocks, the industry is currently trading at 29.02X compared with the S&P 500’s 18.56X. It is also trading above the sector’s trailing 12-month EV/EBITDA of 18.4X.Over the past five years, the industry has traded as high as 38.43X, as low as 12.06X and at the median of 23.78X, as the chart below shows.Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio\n\n3 Wireless Equipment Stocks to Watch\nQualcomm: Headquartered in San Diego, CA, Qualcomm designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access technology. The company is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. It is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge. The buyout of Veoneer, Inc. has offered Qualcomm a firmer footing in the emerging market of driver-assistance technology. The Zacks Consensus Estimate for the current fiscal and next fiscal earnings has been revised 9.2% and 5.4% upward, respectively, since November 2023. It has a long-term earnings growth expectation of 9.5% and delivered an earnings surprise of 7.6%, on average, in the trailing four quarters. It has a VGM Score of B. The stock has gained 35.9% in the past year. Qualcomm carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Price and Consensus: QCOM\nEricsson: Headquartered in Stockholm, Sweden, Ericsson is a leading provider of communication networks, telecom services and support solutions. It is the world’s largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide. The company focuses on 5G system development and has undertaken many notable endeavors to position itself as a market leader. It believes that the standardization of 5G is the cornerstone for digitizing industries and broadband. This Zacks Rank #2 stock has gained 78.4% over the past year. The Zacks Consensus Estimate for the current fiscal earnings has been revised 4.5% upward since November 2023. It has a VGM Score of A.Price and Consensus: ERIC\n\nInterDigital: Headquartered in Wilmington, DE, InterDigital is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions for digital cellular as well as wireless products and networks. IDCC’s global footprint, diversified product portfolio and ability to penetrate different markets are impressive. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive significant value, considering the massive size of the market it licenses. Furthermore, the company remains committed to pursuing acquisitions to drive its product portfolio and boost organic growth. This Zacks Rank #1 stock has gained 107.4% over the past year. It has a VGM Score of A. The stock has a long-term earnings growth expectation of 17.4% and delivered an earnings surprise of 163.7%, on average. The Zacks Consensus Estimate for the current fiscal earnings has been revised 135.4% upward since November 2023.Price and Consensus: IDCC\n\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\nQUALCOMM Incorporated (QCOM) : Free Stock Analysis Report\nEricsson (ERIC) : Free Stock Analysis Report\nInterDigital, Inc. (IDCC) : Free Stock Analysis Report\nTo read this article on Zacks.com click here.\nZacks Investment Research","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2483080130"}