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Buy These 3 Wireless Equipment Stocks That Beat the S&P in Q1
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Dispelling fears of slowing economic growth and speculation about potential recession, the U.S. equity markets reported solid first-quarter 2019 with the S&P 500 recording an average return of 13.1%. This was reportedly the best quarter for the benchmark index since 2009 and the best first quarter since 1998.
Although an economic downturn is likely to occur as part of a boom and bust cycle, given the fact that we are in the midst of the longest ever bull market, a resilient stock market performance gives investors adequate confidence. As the equity markets aim to sustain the momentum in the second quarter on the back of solid U.S. stock market prospects and robust manufacturing data from China, investors could profit from some smart stock picks from one of the most promising sectors.
Zacks Industry Rank Indicates Bullish Prospects
We have cherry picked some outperformers from the Zacks Wireless Equipment industry as we feel that the impending 5G boom is likely to propel the industry to newer heights. The Zacks Wireless Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #95, which places it at the top 37% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
5G is billed as the technology of the future with faster download speed and seamless transfer of data. Leveraging state-of-the-art communication network architectures, 5G is touted to be the primary catalyst for next-generation Internet of Things (IoT) services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that revolutionize key industry verticals. Moreover, 5G is likely to augment the scalability, security and universal mobility of the telecommunications industry, which is expected to propel the wide proliferation of IoT. The industry participants are facilitating its customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible automation. Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and beyond.
3 Industry Outperformers
Motorola Solutions, Inc. (MSI - Free Report) : Based in Chicago, IL, Motorola is a leading communications equipment manufacturer and boasts a strong market position in bar code scanning, wireless infrastructure gear and government communications. The company is poised to benefit from both organic and inorganic growth initiatives, disciplined capital deployment and a favorable global macroeconomic environment.
This Zacks Rank #2 (Buy) firm aims to integrate its growing software suite with the Avtec console line and its video surveillance products from the acquisition of Avigilon. Moreover, Motorola is expanding the software offerings to provide solutions across various segments of the public safety workflow. The company’s competitive position and an attractive portfolio for large addressable markets augur well for healthy revenue growth. With a long-term earnings growth expectation of 8%, it has a VGM Score B and has recorded an average gain of 22.1% in first-quarter 2019. It topped estimates in each of the preceding four quarters, the average positive earnings surprise being 13.2%.
Ubiquiti Networks, Inc. : New York, NY-based Ubiquiti has a comprehensive portfolio of networking products and solutions for fixed wireless broadband, wireless backhaul systems and routing services. Backed by a rapidly growing and highly engaged community of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals, known as the Ubiquiti Community, the company’s business model is highly flexible and adaptable to market demands.
Ubiquiti boasts solid fundamentals and huge revenue-generating potential as it aims to benefit from significant growth opportunities in both emerging and developed economies. These include a relentless pursuit by emerging countries to stay connected with the world through adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth. With a long-term earnings growth expectation of 20.4%, it has recorded an average gain of 50.6% in first-quarter 2019. It topped estimates in each of the preceding four quarters, the average positive earnings surprise being 23.2%. Ubiquiti currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Harris Corporation : Based in Melbourne, FL, Harris has evolved from being a diversified electronics company to one focused on communications equipment and services, network broadcasting, network test and mobile radio networks. The company’s revenue generating capability is buoyed by the possibility of greater military spending by the United States owing to geopolitical tensions. In addition, Harris’ business will likely be augmented by its proposed merger with L3 Technologies. The combined entity, L3 Harris Technologies, will be a global defense technology leader, creating more opportunities for employment and investment growth.
From fiscal 2015 to fiscal 2018, this Zacks Rank #2 firm’s revenues witnessed a compound annual growth rate of 16.7%, reflecting solid order trends and healthy growth dynamics. With a long-term earnings growth expectation of 8%, it has a VGM Score B and has recorded an average gain of 18.6% in first-quarter 2019. It topped estimates in each of the preceding four quarters, the average positive earnings surprise being 2.9%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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Buy These 3 Wireless Equipment Stocks That Beat the S&P in Q1
Dispelling fears of slowing economic growth and speculation about potential recession, the U.S. equity markets reported solid first-quarter 2019 with the S&P 500 recording an average return of 13.1%. This was reportedly the best quarter for the benchmark index since 2009 and the best first quarter since 1998.
Although an economic downturn is likely to occur as part of a boom and bust cycle, given the fact that we are in the midst of the longest ever bull market, a resilient stock market performance gives investors adequate confidence. As the equity markets aim to sustain the momentum in the second quarter on the back of solid U.S. stock market prospects and robust manufacturing data from China, investors could profit from some smart stock picks from one of the most promising sectors.
Zacks Industry Rank Indicates Bullish Prospects
We have cherry picked some outperformers from the Zacks Wireless Equipment industry as we feel that the impending 5G boom is likely to propel the industry to newer heights. The Zacks Wireless Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #95, which places it at the top 37% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
5G is billed as the technology of the future with faster download speed and seamless transfer of data. Leveraging state-of-the-art communication network architectures, 5G is touted to be the primary catalyst for next-generation Internet of Things (IoT) services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that revolutionize key industry verticals. Moreover, 5G is likely to augment the scalability, security and universal mobility of the telecommunications industry, which is expected to propel the wide proliferation of IoT. The industry participants are facilitating its customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible automation. Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and beyond.
3 Industry Outperformers
Motorola Solutions, Inc. (MSI - Free Report) : Based in Chicago, IL, Motorola is a leading communications equipment manufacturer and boasts a strong market position in bar code scanning, wireless infrastructure gear and government communications. The company is poised to benefit from both organic and inorganic growth initiatives, disciplined capital deployment and a favorable global macroeconomic environment.
This Zacks Rank #2 (Buy) firm aims to integrate its growing software suite with the Avtec console line and its video surveillance products from the acquisition of Avigilon. Moreover, Motorola is expanding the software offerings to provide solutions across various segments of the public safety workflow. The company’s competitive position and an attractive portfolio for large addressable markets augur well for healthy revenue growth. With a long-term earnings growth expectation of 8%, it has a VGM Score B and has recorded an average gain of 22.1% in first-quarter 2019. It topped estimates in each of the preceding four quarters, the average positive earnings surprise being 13.2%.
Ubiquiti Networks, Inc. : New York, NY-based Ubiquiti has a comprehensive portfolio of networking products and solutions for fixed wireless broadband, wireless backhaul systems and routing services. Backed by a rapidly growing and highly engaged community of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals, known as the Ubiquiti Community, the company’s business model is highly flexible and adaptable to market demands.
Ubiquiti boasts solid fundamentals and huge revenue-generating potential as it aims to benefit from significant growth opportunities in both emerging and developed economies. These include a relentless pursuit by emerging countries to stay connected with the world through adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth. With a long-term earnings growth expectation of 20.4%, it has recorded an average gain of 50.6% in first-quarter 2019. It topped estimates in each of the preceding four quarters, the average positive earnings surprise being 23.2%. Ubiquiti currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Harris Corporation : Based in Melbourne, FL, Harris has evolved from being a diversified electronics company to one focused on communications equipment and services, network broadcasting, network test and mobile radio networks. The company’s revenue generating capability is buoyed by the possibility of greater military spending by the United States owing to geopolitical tensions. In addition, Harris’ business will likely be augmented by its proposed merger with L3 Technologies. The combined entity, L3 Harris Technologies, will be a global defense technology leader, creating more opportunities for employment and investment growth.
From fiscal 2015 to fiscal 2018, this Zacks Rank #2 firm’s revenues witnessed a compound annual growth rate of 16.7%, reflecting solid order trends and healthy growth dynamics. With a long-term earnings growth expectation of 8%, it has a VGM Score B and has recorded an average gain of 18.6% in first-quarter 2019. It topped estimates in each of the preceding four quarters, the average positive earnings surprise being 2.9%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>