The telecommunications industry saw an uptick in demand due to the expansion of 5G networks and fiber optic infrastructure. This industry also has recently faced a fair share of challenges ranging from geopolitical tensions and inflation. However, the telecoms industry has now seen a rebound due to the growing need for connectivity and IoT services. This led us to create this list of telecom stocks to buy.
Already, we’ve seem many telecom leaders making steady investments into their networks and infrastructure to keep up with AI, data centers, and IP services. We expect to also see a continued rollout of 5G in the coming years. Therefore, these catalysts are expected to create numerous opportunities for innovation, and also investment.
Another appealing aspect of these telecom stocks is their frequent offerings of attractive dividends and share repurchase initiatives. In this article, we have highlighted three telecom stocks to buy with strong shareholder value. They have a balanced blend of stability and growth potential that any investor should consider purchasing.
Millicom International Cellular S.A. (TIGO)
Millicom International Cellular S.A. (NASDAQ:TIGO) is a Latin American-based telecommunications company. The company provides services encompassing data, voice and text messaging, along with mobile financial services. Analysts estimate that this stock will trade within a one-year range of $18-$26.10, with an average of $23.43.
In just the past week, Millicom’s share repurchase initiatives have recently hit news headlines, especially around its recent repurchase of 38,891 Swedish Depository Receipts (SDRs). Not only has this helped Millicom strategically decrease its EPS right before its annual general meeting scheduled on May 23rd, it has also allowed it to return shareholder value for loyal customers.
Looking at the company’s financials, Millicom has slowly recovered from its early dip in 2023 with a stabilized TTM revenue of $5.66 billion. Additionally, the company has optimistically revised its 2022-2024 equity free cash flow guidance from $500 million to $600 million, further bolstering its outlook. Millicom’s stock price is still slightly dampened near its lows. However, investors should keep their eyes on the lookout for a potential surge following its upcoming general meeting. You can see how this made our list of telecom stocks to buy.
T-Mobile U.S. (TMUS)
T-Mobile U.S. (NASDAQ:TMUS) is a nationwide leader in offering voice, messaging and data services to customers across the US. Through its retail stores, T-Mobile app customer care channels, and websites, its business model is composed of selling T-Mobile and Metro by T-Mobile services, devices, and accessories. It also sells its gadgets to dealers and distributors for resale through independent retailers and websites. According to Yahoo Finance analysts, T-Mobile’s one-year price range is expected to be between $137.3-$235, with an average of $186.98.
T-Mobile has recently concluded a multi-year investment in its 5G network, which spanned the entire state and exceeded $290 million. Among the upgrades, the comapny made a $50 million investment in the Greater New Orleans region. The announcement follows the company’s expansion of Ultra Capacity 5G to additional communities throughout Louisiana and the nation last month. According to Louisiana Governor Jeff Landry, “T-Mobile’s investment in our state’s infrastructure will pay dividends for years to come.”
The company’s financials have mirrored this positive outlook with a staggering Quarterly Earnings Growth (yoy) of 36.40%. T-Mobile also had an impressive 123.8% increase in the stock price over the past five years. While its P/E valuation ratio of 23.42x sits slightly higher than its sector average P/E ratio of 15.44, we see this as a reflection of its continued growth prospects.
Verizon Communications Inc. (VZ)
Verizon Communications Inc. (NYSE:VZ) is involved in the global distribution of information, communications and technology products. Yahoo Finance analysts estimate a one-year price range between $34-$50, with an average of $44.88.
In the past year, Controversies such as the use of lead in copper cables have decimated the valuation of VZ’s stock. Nevertheless, following its all-time low in October 2023, the stock has subsequently rebounded. Verizon now sits once again on the rise as a result of its remarkable yield and the return of newfound catalysts that have diminished the presence of these concerns. For example, the company has made newfound partnerships with the NFL and NHL that are bound to expand its future addressable market.
Verizon’s financial stand out in its strong free cash flow and well-covered dividend. The dividend yield of Verizon is 6.69%, and its dividend growth rate is 1.92%. With its free cash flow projections expected to stay on track to $19 million dollars, it looks like Verizon has arisen once more as a dominant leader in the Telecommunications space. If you are looking for telecom stocks to buy, start here.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.