Last Updated on August 1, 2020 by Henry John
Back in March when Ericsson’s stock was on an YTD decline, I listed it as the top most 5G Infrastructure Company. I noted that “Ericsson’s 5G infrastructure technological superiority, in addition to the fact that it’s a European company gives it the technological and political advantage to dominate the 5g infrastructure market”.
Four months later, Ericsson’s stock is flying high and has successfully establish itself as the runaway leader of the 5g infrastructure market.
On the 5g chipset front, Qualcomm has long being tipped to dominate and its recent patent deal with Huawei has further solidify its market position.
Clearly, 5g technology is going to revolutionize industries and 5g companies are going to profit heavily from this revolution.
Picking a 5g stock winner as a stock investor in order to also have a piece of the 5g pie will see your portfolio benefit immensely in the coming years.
There are currently two 5g stocks, Ericsson and Qualcomm that have clearly exerted dominance in their respective 5g space and are tipped to be 5g winners for the next few years. On the carrier front there is stocks like Verizon Communications, and other 5g stocks like Skyworks Solutions and Nokia that has the potential to bring in market beating returns over the next few years.
But, if there’s one stock I’d pick as the #1 5g stock to buy now, its Ericsson’s. The Swedish telecom giant that has established itself as Telecos best choice as they abandon Huawei worldwide.
Ericsson: The #1 5g Stock to buy now
When the share price of a stock has not fully priced in its expected market share and its largest competitor is being removed from the global market because of strong political reason; you call the stock, Ericsson (ERIC).
Ericsson started at $9 per share and dropped by more than 30% to $6 in late March amid the pandemic uncertainties. But it has gone ahead to recover fully and is almost 30% higher than where it started the year, currently priced at $11.55.
Facts be laid, Ericsson is benefiting from the void left by Huawei as the US government forces it out of the global 5g market. All Ericsson had to do is simply fill in the void, and this alone can’t carry it stocks growth for long.
Sooner rather than later, Ericsson will need to sustain its growth focusing more on its on market strengths rather than just capitalizing on the weakness of its largest competitor (Huawei).
There aren’t many companies that are strongly contending with Ericsson in the 5g infrastructure market globally, aside Huawei, only Nokia and Samsung comes close. This also helps Ericsson’s cause.
In the 5g infrastructure market, Ericsson is like a one-eyed man in the midst of blind men. And its common sense to bet on a one-eyed man to lead the way over blind men.
The global 5g infrastructure market size is projected to reach USD58.174 billion by 2025, according to Valuates Reports. Ericsson’s currently market cap is 35.49 billion and most of that market cap is heavily invested in the 5g market.
Ericsson’s 2020 Q2 report saw it beat EPS and Revenue expectations; and overall Ericsson fundamentals are strong to keep it flying higher than its peers.
Nonetheless, it’s not going to be an easy ride, there’s the T-Mobile and Sprint merger and the Panda risk to mention but a few.
In spite of it all, the once struggling telecom giant is enjoying its moments and it’s going to be moments that last long enough.