Top communications stocks in June include Opera Ltd., Netflix Inc. and Tencent Music Entertainment Group, whose share prices have risen more than 80% over the past year, far outpacing the broader sector.
Communications stocks, represented by a benchmark exchange-traded fund (ETF) — the Communication Services Select Sector SPDR ETF (XLC) — have produced a total return of 9% over the trailing 12 months, while the benchmark Russell 1000 index is up 7%.
Here are the top three communications stocks in the Best Value, Fastest Growth, and Most Momentum categories. All statistics in the tables below are as of June 6th.
Communication stocks with the best value for money
These are the communications stocks with the lowest price-to-earnings (P/E) ratios over the last 12 months. Since profits can be returned to shareholders in the form of dividends and buybacks, a low P/E shows that you're paying less for every dollar of profit made.
|Communication stocks with the best value for money|
|Price ($)||Market Cap (Market Cap) ($B)||12 Month P/E Ratio|
|Vodafone Group PLC (VOD)||9.58||25.9||2.1|
|Gray Television Inc. (GTN)||7.78||0.7||2.3|
- Vodafone Group PLC: Vodafone is a British telecommunications company providing voice, data and other wireless services worldwide. Vodafone shares have fallen more than 40% over the past 12 months as the company issued pessimistic forecasts and announced plans to cut 11,000 jobs over the next three years.
- DISH Network Corp.: DISH is a holding company providing retail wireless and pay TV services through subsidiaries. The Company also provides direct broadcast satellite, fixed satellite service products and video programming services. DISH shares are down about two-thirds of their value over the past year, falling to a 24-year low in April on a surge in subscription cancellations.
- Gray Television Inc.: Gray Television owns or operates local television stations in 113 US markets, reaching approximately 35% of US households. In addition, the company owns several manufacturing, marketing and digital businesses. Gray Television's stock has fallen 60% over the past year.
Fastest growing communications stocks
These are the top communications stocks based on a growth model that ranks companies based on a 50/50 weight of their most recent quarterly revenue percentage year-over-year (YOY) growth and most recent quarterly earnings per share (EPS) growth .
Both sales and earnings are crucial factors for the success of a company. As such, ranking companies by only one growth metric is vulnerable to accounting anomalies during that quarter (e.g., changes in tax laws or restructuring costs), which may cause one number or another to no longer be representative of the company in general. Companies with quarterly EPS or revenue growth greater than 1,000% were excluded as outliers.
|Fastest growing communications stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue growth (%)|
|InterDigital Inc. (IDCC)||86.13||2.3||517.2||99.7|
|Vivid Seats Inc. (SEAT)||7.68||0.6||650.0||23.2|
|Cogent Communications Holdings Inc. (CCOI)||61.80||3.0||550.0||3.0|
- InterDigital Inc.: InterDigital is a manufacturer of digital wireless products that provides technology and infrastructure to consumers, businesses and licensees worldwide. The company's revenue doubled in the first quarter after a decision that Chinese tech company Lenovo InterDigital had to pay $139 million to use patented technology.
- Vivid Seats Inc.: Vivid Seats offers an online ticket exchange and retail marketplace. It enables the secondary sale of tickets for sports, music and theater events. The company posted significant earnings growth in the first quarter of 2023, which it attributed to both a robust event offering and strong customer demand.
- Cogent Communications Holdings Inc.: Cogent Communications is an Internet Service Provider operating a global fiber optic network. Cogent's first-quarter net income quintupled from a year earlier, when the company posted a $21 million loss on interest rate swap agreements. Earnings were also boosted by an additional $3 million in interest income. Also in the first quarter, the company completed the acquisition of Sprint Communications' wireline business.
Communication values with the greatest dynamic
These are the communications stocks that have produced the highest total returns over the past 12 months.
|Communication values with the greatest dynamic|
|Price ($)||Market Cap ($B)||12 Month Trailing Total Return (%)|
|Opera Ltd. (OPRA)||18.44||1.7||291.6|
|Netflix Inc (NFLX)||399.29||177.5||102.5|
|Tencent Music Entertainment Group (TME)||7.68||13.2||80.3|
|Russell 1000 index||N / A||N / A||6.7|
|Communication Services Select Sector SPDR ETF (XLC)||N / A||N / A||8.5|
- Opera Ltd.: Opera is a Norwegian web application developer. It designs and builds web browsers for mobile phones and PCs. Opera recently added ChatGPT and free VPN features to its browsers.
- Netflix Inc.: Netflix is a subscription video streaming service provider that also develops and produces a variety of television shows, films, and related content. Netflix stock has rebounded over the past year after plummeting in late 2021 and early 2022 on subscriber losses. Netflix subscriptions skyrocketed in May after the company began restricting US password sharing
- Tencent Music Entertainment Group: Tencent Music is the music business subsidiary of Chinese conglomerate Tencent Holdings (TCEHY). The Company provides online music, karaoke, live streaming and online concert services through its QQ Music, Kugou Music, Kuwo Music and WeSing apps. Tencent Music stock nearly doubled in November 2022 after the company reported a nearly 40% increase in net income and an 18% increase in music subscription revenue.
Benefits of investing in communications stocks
Essential Services: Communication services play a crucial role in people's daily lives and help shape the digital economy. Companies in this sector provide the infrastructure, products and services that businesses and consumers need to connect to an increasingly digital world. COVID-19 has accelerated the transition to virtual or remote experiences, a trend consumers have embraced and is likely to keep demand for innovative communications solutions strong.
infrastructure spending: Under the comprehensive $1.2 trillion infrastructure bill passed by the US Legislature in 2021, $65 billion is earmarked for expanding broadband access and 5G connectivity nationwide. National spending on communications infrastructure benefits companies that build, service and lease such equipment. For example, cell phone operators like American Tower Corp. (AMT), Crown Castle Inc. (CCI) and SBA Communications Corp. (SBAC) benefit from the increasing adoption of telecommunications.
Risks of investing in communications stocks
antitrust legislation: Leading big tech communications stocks like Meta Platforms Inc. (META) and Alphabet Inc. (GOOGL) face potential challenges from antitrust legislation that could weaken their grip on digital communications. The proposed American Innovation and Choice Act, which has bipartisan support in the House and Senate, would establish legislation banning these companies from advantages in marketing their products and making it easier for competitors to communicate with customers and gather information about their users . If passed by Congress, the law would result in a significant change in the way communications services are offered in the United States and would result in increased volatility in the industry.
Component shortage: Communications companies rely heavily on certain materials and components when building their products and infrastructure. The recent global chip shortages, caused by pandemic-related supply chain disruptions, labor problems and unprecedented demand, led to a shortage of semiconductors, which in turn crippled the communications sector in 2022. Future shortages of similar products or the materials used to manufacture them could result in similar shortages in production.
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At the time of writing this article, the author owns Netflix stock.
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