The telecommunication industry is driving rapid innovation, with 5G technology poised to be a major breakthrough in 2024. As the next evolution of networks, 5G offers faster speeds, lower latency, and a range of new applications that promise to revolutionize numerous sectors, enhancing productivity and connectivity.
Thus, investing in companies leveraging 5G growth, such as Hewlett Packard Enterprise Company (HPE), Qorvo, Inc. (QRVO), and Aviat Networks, Inc. (AVNW), may be a strategic move. These companies stand to benefit significantly as 5G expands, offering increased opportunities in various industries reliant on advanced networks.
5G’s transformative potential has already made it the fastest-growing mobile broadband technology, surpassing 1.5 billion connections by 2023, just four years after its launch. The rapid adoption highlights its impact across industries, setting a strong foundation for future technological advancements.
As more devices are designed to operate on 5G, the demand for networks is skyrocketing. In North America, major telecom companies now offer 5G, covering over 200 million homes and businesses, with projections suggesting this number will double within the next four years.
A robust digital infrastructure is crucial for national competitiveness, and it will become even more critical moving forward. Policymakers are actively supporting these advancements to ensure their countries remain leaders in the global market, particularly as 5G continues to expand.
The Federal Communications Commission (FCC) plans to allocate $9 billion through the Universal Service Fund to enhance 5G wireless services in rural America. The funding aims to bridge the digital divide and ensure broader access to cutting-edge technology nationwide.
Looking forward, according to a report published by Grand View Research, the global 5G services market is expected to grow at a CAGR of 59.4% by 2030, reaching an impressive $2.21 trillion. This growth underscores 5G’s profound economic and technological impact across the globe.
Considering these positive trends, let us dive deep into the fundamentals of three 5G stocks, starting with #3.
Stock #3: Hewlett Packard Enterprise Company (HPE)
HPE is a global technology company that offers general-purpose servers, hybrid cloud solutions, wired and wireless networks, and flexible investment solutions for technology deployment models. Its segments include Server; Hybrid Cloud; Intelligent Edge; Financial Services; and Corporate Investments and Other.
On September 16, HPE announced a new private cloud services deal with Barclays PLC (BCS), the British universal bank, to include HPE GreenLake Cloud in BCS' hybrid cloud strategy. Through this partnership, HPE aims to expand its global client base, enhancing its international presence and driving business growth.
On September 5, HPE revealed that its Private Cloud AI is now available to order, alongside new solution accelerators designed to streamline AI applications. As AI adoption accelerates, these innovations will strengthen HPE's position in the market, boosting its growth prospects and expanding its market influence.
During the fiscal 2024 third quarter that ended July 31, HPE’s net revenue increased 10.1% year-over-year to $7.71 billion. Its non-GAAP earnings from operations grew 7.4% from the year-ago value to $771 million.
In addition, HPE’s non-GAAP net earnings and non-GAAP EPS increased 3.4% and 2% from the prior year’s period to $661 million and $0.50, respectively.
Analysts expect HPE’s revenue for the fiscal fourth quarter ending in October 2024 to increase 12.4% year-over-year to $8.26 billion. Its EPS for the ongoing quarter is expected to grow 6.8% year-over-year to $0.56. Moreover, the company surpassed the consensus EPS estimates in all four trailing quarters.
Shares of HPE have gained 7.1% over the past five days to close the last trading session at $17.23.
HPE’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
HPE has an A grade for Value and a B grade for Sentiment. Within the Technology – Communication/Networking industry, HPE is ranked #9 of 47 stocks.
Click here to access additional HPE ratings for Momentum, Growth, Quality, and Stability.
Stock #2: Qorvo, Inc. (QRVO)
QRVO develops and commercializes technologies for wireless, wired, and power markets. The company’s operations span three segments: High Performance Analog (HPA); Connectivity and Sensors Group (CSG); and Advanced Cellular Group (ACG). It also offers foundry services for defense and aerospace clients.
On January 31, QRVO announced a definitive agreement to acquire Anokiwave, a supplier of high-performance silicon integrated circuits for intelligent active array antennas used in defense, SATCOM, and 5G applications. Anokiwave’s high-frequency beamforming and IF-to-RF conversion ICs would complement QRVO’s existing RF front-end portfolio.
The combination of QRVO’s unique capabilities with Anokiwave's technology will enable QRVO to deliver highly integrated solutions and SiPs for defense, aerospace, and network infrastructure. The acquisition would strengthen QRVO’s ability to provide comprehensive solutions in these key sectors.
QRVO’s revenue for the fiscal 2025 first quarter, which ended on June 29, 2024, increased 36.2% year-over-year to $886.67 million. Its non-GAAP operating income rose 110.1% year-over-year to $98.13 million.
Additionally, the company’s non-GAAP net income amounted to $83.52 million, or $0.87 per share, up 148.5% and 155.9% year-over-year, respectively. QRVO exceeded its June quarterly guidance for revenue, gross margin, and EPS. The company is poised for sequential increases in revenue, gross margin, and EPS for the September quarter, signaling steady growth.
For the September 2024 quarter, QRVO projects revenue of approximately $1.025 billion, with a potential variance of $25 million. Non-GAAP gross margin is expected to be between 46% and 47%, while non-GAAP diluted earnings per share are forecasted to be between $1.75 and $1.95.
Street expects QRVO’s revenue and EPS for the next fiscal year ending in March 2026 to increase 8% and 28.3% year-over-year to $4.27 billion and $7.97, respectively. Moreover, the company has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of HPE have gained 4.7% over the past year to close the last trading session at $100.46.
QRVO’s promising outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
QRVO has a B grade for Growth, Sentiment, and Quality. It is ranked #4 out of 91 stocks in the Semiconductor & Wireless Chip industry.
Beyond what we stated above, we have also given QRVO grades for Value, Momentum, and Stability. Get all the QRVO’s ratings here.
Stock #1: Aviat Networks, Inc. (AVNW)
AVNW provides microwave and wireless access networking solutions. The company offers a range of products, including outdoor, indoor, and split-mount radios, microwave routers, switches, and trunking systems. It also delivers private LTE, virtual fiber, element management solutions, and hosted software products.
On July 2, AVNW announced its acquisition of 4RF Limited, a provider of industrial wireless access solutions. The acquisition includes 4RF’s narrowband radios, private LTE, and 5G routers. 4RF's established presence across 300 critical infrastructure customers in 160 countries complements AVNW’s existing portfolio.
The two companies’ distinct customer bases, with around 90% non-overlapping, create significant cross-selling opportunities. This synergy can drive AVNW’s expansion by reaching new markets and boosting revenue through broader product offerings.
On January 8, AVNW announced a strategic collaboration with PT Smartfren Telecom, Indonesia’s only fully 4G-based telecommunication provider. The partnership aims to deliver high-speed wireless connectivity and digitalization services, offering both indoor and outdoor private wireless networks.
With approximately 36 million subscribers and being one of the top 10 largest operators in Southeast Asia, Smartfren offers a strong foothold in the region. By enhancing AVNW’s competitive positioning through joint sales, solution engineering, and customer support, the collaboration sets the stage for deeper market penetration and customer growth.
During the fiscal 2024 third quarter that ended March 29, AVNW’s revenue increased 33.7% year-over-year to $111.61 million. Its non-GAAP operating income grew 16.2% from the year-ago value to $10.80 million. Plus, the company’s adjusted EBITDA rose 11.1% from the prior year’s period to $12.05 million.
In addition, AVNW’s non-GAAP net income increased 5.7% year-over-year to $9.38 million, while non-GAAP net income per share stood at $0.73.
The consensus revenue and EPS estimates of $484.16 million and $3.47 reflect an increase of 18.9% and 6.2% year-over-year, respectively. Moreover, the company surpassed the consensus EPS estimates in each of the four trailing quarters.
Shares of AVNW have gained 3.5% intra-day to close the last trading session at $22.09.
It’s no surprise that AVNW has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Value and a B grade for Growth. Within the Technology – Communication/Networking industry, AVNW is ranked #6 of 47 stocks.
Click here to access additional ratings of AVNW for Momentum, Sentiment, Quality, and Stability.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
HPE shares rose $0.66 (+3.83%) in premarket trading Tuesday. Year-to-date, HPE has gained 2.83%, versus a 19.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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