How to invest in the best 5G stocks
It was in 1980 that 1G (first generation) wireless mobile technology helped launch the first mobile phones. Nearly forty years later, a new revolution is taking place that will significantly increase global internet connectivity while producing blisteringly fast internet speeds with a larger capacity. The 5G (fifth generation) wireless mobile technology boom is already taking place and is now at the heart of many government policies and company action plans which is why learning how to invest in 5G stocks is now very popular.
With the 5G upgrade cycle now imminent - which is capable of producing speeds 100 times faster than networks currently in place - investors are keen to find out more about this game-changing fifth generation of mobile technology and which companies are leading the race.
In this article you will learn:
- What are 5G stocks.
- How to invest in 5G stocks in just a few simple steps.
- What are the best 5G stocks to buy now and how to get started with a live or demo trading account from Admiral Markets UK Ltd.
- How to upgrade your trading platform to the Admiral Markets Supreme Edition completely FREE to find actionable trading ideas on the best 5G stocks.
- And much, much more!
What are 5G stocks?
5G is a new generation of wireless technology that is set to start a new industrial revolution. It follows on from 4G technology which made video calling and online streaming much faster than 3G technology which was the first breakthrough in enabling video calls in the 2000s. Before that, it was 2G technology in the 1990s that helped launch text messaging and then 1G before that in the 1980s.
While 5G technology is expected to provide speeds 100 times faster than the networks currently in place, it also provides greater capacity which allows for thousands of devices to be connected at the same time - important in a more connected world. According to The Office of Communications (OFCOM) - the UK's communication regulator - the biggest difference with 5G is the "potential for new, innovative services" such as the ones shown below which include virtual and augmented reality, e-health and smart energy networks and much, much more.
Many governments around the world have made the rolling out of 5G networks a top priority and companies are also now producing goods that offer 5G connections, helping to get closer to the realisation of 'smart cities'. While 5G is not expected to be global until 2025, companies are racing to be at the forefront of the 5G revolution. This opens up very interesting opportunities for both traders and investors in the know.
Did you know that you can view live and historical prices of 5G stocks by downloading the MetaTrader 5 trading platform provided by Admiral Markets completely FREE? By doing this now, you will also be able to follow through some of the next examples. Click on the banner below to get started with your free download:
What are the best stocks for 5G technology?
While it is impossible to predict the future and which companies are likely to benefit the most from the 5G rollout, traders and investors can track the performance of companies that are directly related to the adoption, development and building of the 5G network.
When trying to decide what are the best 5G stocks to buy now, the first step is to identify which companies have exposure to 5G, either directly or indirectly. Traders and investors may then use technical analysis tools to help identify where to enter and exit.
Some tools can be helpful in making these types of decisions as we will discuss further down this article but ultimately the decision is down to the trader and investor. Strict risk management principles are essential in this process as markets go up and down, meaning traders can win and lose.
For now, let's take a look at a few companies which are heavily involved in 5G wireless technology.
The top five 5G stocks
#1 Qualcomm Inc (QCOM)
In 2019, Bank of America Global Research analyst Tal Liani, said that semiconductor leader Qualcomm is one of the "most important players in 5G development". The company is well-positioned due to the fact it designs and creates software and chips for wireless equipment such as mobile phones. In the past, the company has successfully licenced its 3G and 4G technologies.
The rollout of 5G could be a big boost for Qualcomm as the company announced plans to sell 5G modems to Apple. According to Liani, the company's 5G modem and connectivity solutions could add between $5 billion and $10 billion to Qualcomm's revenue.
While the deal with Apple is certainly a huge boost for the company, its chips and modems are also used in other mobile phones such as Xiaomi's 5G phones, autonomous cars and other Internet of Things devices from Sony, Sharp, LG and others. Even during the coronavirus period, the company posted better than expected earnings per share and revenue figures.
Below is the long-term, monthly price chart of the Qualcomm CFD ( Contracts for Difference) share price:
Source: Admiral Markets MetaTrader 5, #QCOM, Monthly - Data range: from 1 December 1991 to 17 July 2020. Please note: Past performance is not a reliable indicator of future results.
In the above price chart of the Qualcomm CFD share price, it's clear to see the long-term, if not rather choppy, trend higher. The green wavy line represents the 200-period exponential moving average which is often used as a trend indicator and level of support and resistance where turning points in price could take place.
According to the Wall Street Journal, the median price target for the company's share price, from different surveyed investment banks and analysts in July 2020 is $100. However, these do change over time.
Did you know that you can speculate on the price direction of Qualcomm using CFDs? This means you can trade both long and short depending on whether you think its price will rise or fall. CFDs also allow traders to trade on margin, meaning you could control a large position with a small deposit which can amplify wins as well as losses.
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#2 Taiwan Semiconductor Manufacturing Co. (TSM)
The Taiwan Semiconductor Manufacturing Co. is another chip manufacturer. In fact, it is the world's largest contract chip manufacturer and supplies some of the world's most advanced chips to well-known multinational companies such as Apple and NVIDIA.
As 5G continues to ramp up around the world, demand for suitable chips is likely to increase as well. However, opinions among investors are mixed for the company with the highest price target on the stock at $74.60 compared to the lowest price target on the stock at $18.20.
One concern is that the company still produces its old chips in China which leaves them exposed to political tensions between China and Taiwan. However, the company's newest chips are produced in Taiwan.
Below is the long-term, weekly price chart of the Taiwan Semiconductor Manufacturing Co. CFD share price:
Source: Admiral Markets MetaTrader 5, #TSM, Weekly - Data range: from 23 April 2017 to 17 July 2020. Please note: Past performance is not a reliable indicator of future results. Last five-year data unavailable as Admiral Markets data only dates back to April 2017.
In the above weekly price chart, the orange line represents the 100-period exponential moving average. Since 2018, the price has accelerated at a higher pace than during the 2017 period and even rose while losing sales from the loss of Huawei in 2019. Fortunately, its chips are used in the newest Apple iPhone and the Playstation 5 and Xbox Series X, helping to keep demand stable.
#3 Ericsson (ERIC)
Ericsson is a leader in telecommunications network infrastructure and has a more than 25% market share in the 2G, 3G and 4G mobile networks. While the company offers an array of services which includes software and infrastructure, they had 81 deals signed during the beginning of the year. These deals are to provide services and hardware to telecom providers who need to upgrade their networks in order to handle the new speed increases provided by 5G technology.
When asked the question: what are 5G stocks? Ericsson is a company that depicts just that. It was the first company to deploy a 5G network and did so across four continents, claiming that it has the largest range of devices that support 5G connections.
In the long-term, Ericsson's share price has seen some major highs and lows, as the share price chart shows below:
Source: Admiral Markets MetaTrader 5, #ERIC, Monthly - Data range: from 1 January 1990 to 17 July 2020. Please note: Past performance is not a reliable indicator of future results.
While the 2000 tech bubble and rise of smartphones like Apple weighed heavily on the company's share price in the past, analysts take note of the recovery that has been underway since Börje Ekholm took over as chief executive in 2017. In its July 2020 earnings report the company soared more than 10% as they reported better than expected second-quarter earnings mainly boosted by a rise in 5G network and software sales.
Source: Admiral Markets MetaTrader 5, #ERIC, Monthly - Data range: from 1 October 2003 to 17 July 2020. Please note: Past performance is not a reliable indicator of future results.
This boost led Ericsson's share price to break through historical levels of technical resistance, including the 100-period exponential moving average, as shown above. While the company's share price is above the $10.84 median price target from the different investment banks and analysts surveyed in the Wall Street Journal in July 2020, the rise in 5G demand puts Ericsson at the forefront of the race.
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#4 T-Mobile US (TMUS)
After T-Mobile US closed its buyout of Sprint in April 2020, the mega-merger - which brought together the third and fourth-largest carriers in the US - has propelled the company to become a telecoms giant well placed to capitalise on 5G technology. In fact, the company is spending $40 billion over the next three years to build a nationwide 5G network by 2024.
While competition is fierce from rivals such as Verizon (VZ), the combined company of T-Mobile and Sprint allows for interesting revenue streams and a bigger rollout of its 5G network. According to the Wall Street Journal in July 2020, the median price target for T-Mobile US was $112.79 with the highest price target of $132.00.
Below is the long-term, monthly price chart of the T-Mobile US Inc CFD:
Source: Admiral Markets MetaTrader 5, #TMUS, Monthly - Data range: from 1 April 2007 to 17 July 2020. Please note: Past performance is not a reliable indicator of future results.
The company's share price has been on a steady rise higher since bottoming out in 2012. This impressive rally may not yet have fully factored in the company's ability to roll out a nationwide 5G network with price trading at all-time highs even over the coronavirus period.
#5 Apple (AAPL)
While most of the previous list has covered network providers and infrastructure operators, mobile phone device makers are also set to benefit from 5G technology due to upgrades and the possibility of more connectivity.
Apple is reported to release a new 5G-enabled iPhone in September 2020 which could lead to millions of iPhone, Apple Watch and iPad upgrades in the years to come. Not to mention, users rushing to use devices that can connect to more applications via 5G networks such as vehicles, drones, etc.
Fortunately, Apple already has a growing services sector and revenue from multiple sources. This has helped to lift its share price to all-time high price levels even over the coronavirus period as the long-term, monthly price chart shows below:
Source: Admiral Markets MetaTrader 5, #AAPL, Monthly - Data range: from 1 July 2006 to 17 July 2020. Please note: Past performance is not a reliable indicator of future results.
When it comes to trying to find out what are the best 5G stocks to buy now, or how to invest in 5G stocks, having access to an array of trading and investing tools can provide an edge. Did you know that you can upgrade your MetaTrader 5 trading platform provided by Admiral Markets to the exclusive Admiral Markets Supreme Edition?
In this supercharged upgrade you can access technical analysis from Trading Central on thousands of different financial instruments, as well as actionable trading ideas from the Technical Insight™ indicator.
For example, below shows all the active events for Apple's share price on 17 July 2020:
A screenshot showing an example of searching 'Apple' in the Trading Central Technical Insight indicator in the MetaTrader 5 Supreme Edition platform provided by Admiral Markets.
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How to invest in 5G stocks
Once you've identified what are the best 5G stocks for you, you can view their price charts and trade directly from the MetaTrader 5 trading platform provided by Admiral Markets using the following steps:
- Open your trading platform, or start your free download here.
- Open the Market Watch window which is found from the View tab in the top menu or press Ctrl+M on your keyboard.
- In the Market Watch window, click the last line which has a plus button and text saying 'click to add' and type in the instrument you wish to trade on. A selection of instruments will appear, press enter on the relevant one to confirm.
- Now this will be added to your Market Watch window, simply drag the symbol onto the chart.
- To open a trading ticket on the chart you wish to trade, right-click, select Trading and then New Order. A trading ticket will open up for you to input your own entry, stop loss and take profit levels as well as your position size.
A screenshot showing the MetaTrader 5 trading platform provided by Admiral Markets with a trading ticket open on the chart.
Why trade 5G stocks with Admiral Markets?
- You can trade with a well-established company authorised and regulated by the Financial Conduct Authority (FCA).
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- Upgrade your trading platform completely FREE to the Supreme Edition for actionable trading ideas on thousands of different stocks and shares.
- Open an Invest.MT5 investing account to buy stocks, shares and ETFs from 15 of the largest stock exchanges in the world.
- Open an Admiral.Markets or Trade.MT5 trading account to trade via CFDs, allowing you to go long and short a market and potentially profit from rising and falling markets.
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