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3 Communication Services Stocks to Buy on Looming Rate Cuts
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Communication Services has been one of the success stories from Wall Street in 2024. As of August 2024, The Communication Services Select Sector SPDR (XLC) had grown 20.8% year to date, trailing only the Financials and Utilities segments.
The sector represents companies that provide wired, wireless, satellite, cable, Internet media services, broadcasting and other communication infrastructure, some of the most forward-looking businesses for investors to get their hands on. Also, these companies generally boast strong fundamentals.
Sectors like communications services that have strong fundamentals generally survive market volatility relatively unscathed by cutting costs and maintaining strong balance sheets. Also, with Fed rate cuts immediately on the horizon, widely anticipated to start from September itself, the sector has only upsides in the offing. In such an environment, mega-cap growth stocks like tech and communication services seem lucrative as they currently seem undervalued.
Effectively being a subset of the tech sector, companies that comprise communication services constantly invest in new technologies and innovation and offer significant opportunities for price appreciation.
The hype around “generative artificial intelligence (AI)” has made mainstream headlines in the past year and has driven growth in this sector. Several communication services companies could be well-positioned to benefit from the continued evolution of generative AI capabilities. However, while this is a new chapter with the potential to drive incremental engagement and enhance relationships between customers and companies, only time will tell whether the market upside it has created is, in fact, a bubble. For the time being though, the segment should do well.
Thus, we have selected three communication services stocks that should be gaining ground in the ensuing months and can be added to your portfolio now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Bilibili Inc. (BILI - Free Report) is a company that provides online entertainment services in China.
BILI’s expected earnings growth rate for the current year is 100%. The Zacks Consensus Estimate for its current-year earnings has improved 100% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
SES S.A. (SGBAF - Free Report) is a company engaged in the business of satellite-based data transmission and related services.
SES’ expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for its current-year earnings has improved 1.6% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
Tencent Holdings Limited (TCEHY - Free Report) is a tech company based out of China that provides messaging services, social networking services, online media, Internet value-added services, multiplayer online games, e-commerce and online advertising.
TCEHY’s expected earnings growth rate for the current year is 32%. The Zacks Consensus Estimate for its current-year earnings has improved 4% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of B.
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3 Communication Services Stocks to Buy on Looming Rate Cuts
Communication Services has been one of the success stories from Wall Street in 2024. As of August 2024, The Communication Services Select Sector SPDR (XLC) had grown 20.8% year to date, trailing only the Financials and Utilities segments.
The sector represents companies that provide wired, wireless, satellite, cable, Internet media services, broadcasting and other communication infrastructure, some of the most forward-looking businesses for investors to get their hands on. Also, these companies generally boast strong fundamentals.
Sectors like communications services that have strong fundamentals generally survive market volatility relatively unscathed by cutting costs and maintaining strong balance sheets. Also, with Fed rate cuts immediately on the horizon, widely anticipated to start from September itself, the sector has only upsides in the offing. In such an environment, mega-cap growth stocks like tech and communication services seem lucrative as they currently seem undervalued.
Effectively being a subset of the tech sector, companies that comprise communication services constantly invest in new technologies and innovation and offer significant opportunities for price appreciation.
The hype around “generative artificial intelligence (AI)” has made mainstream headlines in the past year and has driven growth in this sector. Several communication services companies could be well-positioned to benefit from the continued evolution of generative AI capabilities. However, while this is a new chapter with the potential to drive incremental engagement and enhance relationships between customers and companies, only time will tell whether the market upside it has created is, in fact, a bubble. For the time being though, the segment should do well.
Thus, we have selected three communication services stocks that should be gaining ground in the ensuing months and can be added to your portfolio now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Bilibili Inc. (BILI - Free Report) is a company that provides online entertainment services in China.
BILI’s expected earnings growth rate for the current year is 100%. The Zacks Consensus Estimate for its current-year earnings has improved 100% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
SES S.A. (SGBAF - Free Report) is a company engaged in the business of satellite-based data transmission and related services.
SES’ expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for its current-year earnings has improved 1.6% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
Tencent Holdings Limited (TCEHY - Free Report) is a tech company based out of China that provides messaging services, social networking services, online media, Internet value-added services, multiplayer online games, e-commerce and online advertising.
TCEHY’s expected earnings growth rate for the current year is 32%. The Zacks Consensus Estimate for its current-year earnings has improved 4% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of B.