In this article, we talked about the 10 best 5G stocks to buy under $10. If you’re in a hurry, click to skip ahead to the 5 Best 5G Stock to Buy Under $10.
5G is the next generation of mobile internet connection. The industry has the ability to pave the way to a more advanced way of living with new kinds of modern-day tech products. “The benefits of the new technology are expected to fuel transformative new technologies, not just for consumers but also for businesses, infrastructure, and defense applications,” said CNN. Previously we covered the 10 Best Communication Equipment / 5G Stocks to Buy Now in an article.
As the world of technology expands, the need for 5G networks has become inevitable. In an article published by Statitsa, by 2024, 5G subscriptions worldwide will be around 1.9 billion. In a separate article published on Cision, “The global 5G technology market size is anticipated to be at $5.53 billion in 2020 and is projected to reach $667.90 Billion by 2026, registering a CAGR of 122.3% from 2021 to 2026.”
Although the industry has not been around for very long, it has continuously proven its importance to the economy. Enforced lockdown and social distancing brought about by the COVID-19 pandemic has only further emphasized the need for 5G networks. Many across the country relied solely on working remotely to keep their businesses alive and socialize during the pandemic. Ericsson’s Mobility Report showed that there was an up to 90% increase in voice over Wi-Fi calls for some service providers. The report also showed that 83% of their survey respondents claim that ICT helped them cope with the lockdown.
The 5G industry seems positive under The Biden Administration. Newly elect Joe Biden has expressed his intent of prioritizing universal broadband for economic recovery. He plans to spend $20 billion in expanding rural broadband infrastructure, tripling funding for broadband expansion to rural areas, and reforming the Lifeline program, which subsidizes internet and phone services for low-income participants. President and CEO of the Small Business and Entrepreneurship Council said
"There will be significant consensus for infrastructure spending on broadband. Focusing on building out 'the last mile,' winning the race to 5G, and implementing other needed reforms to get to universal access will be attainable by President-elect Biden if he focuses on strengthening the public-private model. That would be a major accomplishment under his watch."
The race to the most efficient 5G network heats up. Tech giant, Apple (AAPL) recently launched their 5G iPhone and since then they have reported an overall iPhone sales of $66 billion (2020 Q4). CEO Tim Cook commented that it was the largest number they have seen: “we saw the largest number of upgraders than we’ve ever seen in a quarter, so we were thrilled about that”.
In order to identify the 10 Best 5G Stocks To Buy Under $10, we identified the stocks under $10 from the First 5G ETF (FIVG) holdings as of February 1, 2021, and we were able to rank them using the hedge fund sentiment scores.
Our in-house research showed that by using the hedge fund sentiment data, we can identify a small group of stocks that can outperform the S&P 500 index on average by double digits annually. For instance, the portfolio of stock picks in our monthly newsletter has beaten the market by over 88 percentage points since March 2017. Some of the portfolio choices for our monthly newsletter were also publicly shared on our website. In October, we posted this real estate stock idea and since then it’s been up more than 50 percent.
10. Orange SA (NYSE:ORAN)
No of HFs: 4
Total Value of HF Holdings: $5.85 Million
ORAN is the 10 best 5G stock to buy under $10. The stock shares currently trade at $11.75. The top hedge fund holder of this stock is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital which had $3 million invested in the stock at the end of September.
9. Ribbon Communications, Inc. (NASDAQ:RBBN)
No of HFs: 9
Total Value of HF Holdings: $20.7 Million
RBBN shares currently trade at $7.31. The top hedge fund holder of this stock is Stephen Feinberg’s Cerberus Capital Management which had $10 million invested in the stock at the end of September. An insider recently purchased 2,000 shares at around $4 in November 2020. The stock is up 75% since then. Recently, the company announced that it is expanding its relationship with Synnex (SNX). Otavio Lazarini, SVP, Latin America from Synnex said,
"We're proud to work with Ribbon and leverage their market leadership with our resellers. Ribbon's Unified Communications and Collaboration-enabling Edge solutions and relationship with Microsoft will help us deliver additional value to our CALA partner base and grow market share."
8. KT Corp (NYSE:KT)
No of HFs: 10
Total Value of HF Holdings: $147 Million
KT shares currently trade at $10.52. At the end of September, a total of 10 hedge funds tracked by Insider Monkey were long this stock. The top hedge fund holder of this stock is David Iben’s Kopernik Global Investors which had around $79 million invested in the stock at the end of September. In 2020, the company announced the success of its IPTV service exported globally to Thailand. Park Yoon-Young, president of KT's Enterprise Business Group said,
"This project is a new model of cooperation between KT and global partners specializing in media solutions, set-top box technology and other media business areas. Riding on its success in Thailand, KT will be able to expand its IPTV business to other Southeast Asian countries and further around the world."
7. Extreme Networks, Inc. (NASDAQ:EXTR)
No of HFs: 16
Total Value of HF Holdings: $68.6 Million
The 7th best 5G stock to buy under $10 is EXTR. The top hedge fund holder of this stock is D.E. Shaw’s DE Shaw which had over $18 million invested in the stock at the end of September. An insider recently purchased 10,000 share at around $4 in November 2020. The stock is up 150% since then. During the fiscal third quarter that ended March 31, 2020, the company reported a revenue of $209.5 million.
Voss Capital is the third largest hedge fund holder of EXTR among the 800+ hedge funds tracked by Insider Monkey. Travis Cocke said the following about EXTR in his 2020 Q3 investor letter seen by Insider Monkey:
"EXTR provides software driven networking solutions for large enterprise campuses, universities, hospital systems, large outdoor venues like stadiums, public mass transit networks, and data centers worldwide (i.e. it enables Wi-Fi in extreme situations). It sells wired and wireless network infrastructure equipment, as well as software for network management, analytics, and security. EXTR is remarkably similar to AVID in that it’s trading at depressed multiples (0.75x EV/Sales, 1.25x EV/Gross profit, and 7x FCF), has moderate leverage (~$215 million net debt), and has been left for dead by the investment community after years of underperformance and operational missteps. However, Voss’s variant view is the company has industry leading technology in the Wired and Wireless Local Area Network (WLAN) industry and a burgeoning subscription and recurring revenue business built off its large customer base (~60,000 enterprises globally). This recurring revenue transition was accelerated through the acquisition of Aerohive that occurred 14 months ago (which multiple of our industry contacts have coincidentally called a “game changer”).
...Extreme has a market cap of $575 million and an Enterprise Value of $795 million. We believe on a normalized basis the business should generate between $1 billion and $1.1 billion in revenues (currently valued at 0.7-0.8x sales), 61-62% aggregate gross margin (~1.3x EV/gross profit, the third cheapest stock on this basis across the entire North American tech universe), and 15% operating margins. We believe the company will generate over $80 million in FCF over the next twelve months (versus $40 million consensus), and $105 million in unlevered FCF in the next twelve months, implying a 7.0-7.5x multiple, which is cheap compared with revenue growth in mid to high single digits and gross profit growth potentially into the teens."
6. Limelight Networks, Inc. (NASDAQ:LLNW)
No of HFs: 17
Total Value of HF Holdings: $74.2 Million
LLNW shares currently trade at $4.56. At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock. An insider recently purchased 21,550 shares at around $2 in July 2019. The stock is up 50% since then. Recently, the company announced a change in their board of directors where Bob Lyons was named the new President and CEO of the company. Walt Amaral, Chair of the Limelight Networks Board of Directors said,
“We are excited to welcome Bob Lyons as we believe he is uniquely qualified to lead Limelight into its next phase of accelerated growth, profitability, and innovation. His passion for the customer and demonstrated track record of building high performing, innovative organizations aligns very well with our strategic objective to build on our current strengths and become a leader in delivering edge-based solutions. We are grateful for Bob Lento’s leadership and the many heights reached during his tenure. His success in rebuilding the company, outstanding customer relationships, and creating a dynamic, high-performance culture are some of his most notable accomplishments,”
5. Neophotonics Corp (NYSE:NPTN)
No of HFs: 17
Total Value of HF Holdings: $52.2 Million
The 5th best 5G stock to buy under $10 is NPTN. NPTN shares currently trade at $11.14. The top hedge fund holder of this stock is Jim Simons’ Renaissance Technologies which had $16 million invested in the stock at the end of September. An insider recently purchased 50,000 shares at around $3 in May 2019. The stock is up 266% since then. Recently the company announced a new Arrayed Waveguide Grating (AWG) multiplexers and de-multiplexer for high capacity of Data Center Interconnect optical fibers. Tim Jenks, Chairman, and CEO of NeoPhotonics commented,
“We are pleased to announce initial shipments of our new line of AWGs designed to support our customers’ high baud rate DCI and Telecom coherent transmission systems. As an industry leading designer and vertically integrated manufacturer we have been able to respond rapidly to different customer needs and to efficiently meet this emerging market demand,”
4. Infinera Corp (NASDAQ:INFN)
No of HFs: 20
Total Value of HF Holdings: $261 Million
INFN shares currently trade at $9.85. The top hedge fund holder of this stock is Howard Marks’ Oaktree Capital Management which had $155 million invested in the stock at the end of September. An insider recently purchased 15,000 shares at around $4 in May 2020. The stock is up 125% since then. In 2020, INFN announced that it has joined IOWN Global Forum to accelerate innovations in next-generation optical networks. Dave Welch, Founder, and Chief Innovation Officer, at Infinera said,
“Optical technologies are at the heart of cost-effective, low-power, scalable solutions for next-generation communication networks. The ability to help transform optical networks is a tremendous opportunity. We look forward to introducing XR optics and other innovations to the IOWN community and collaborating on how next-generation technologies can pave the way to an advanced optical architecture for the 21st century.”
3. Nokia Corp (NYSE:NOK)
No of HFs: 21
Total Value of HF Holdings: $173 Million
NOK shares currently trade at $4.56. The company was mentioned as one of the 15 Most Powerful Weapons in the World. Recently, the company announced that they will be accelerating Tele2’s existing solutions by deploy new solutions to enhance network reliability and improve infrastructure efficiency and speed. Thomas Helbo, CTO, Tele2, said:
“We looked for a knowledgeable partner to successfully and efficiently handle the rollout of our 5G core in a reliable way, and we found just that in Nokia. With Nokia handling the integration and their ability to leverage years of experience, our team is able to concentrate on enabling new services for our customers, while running a smart and reliable network.”
2. A10 Networks, Inc. (NYSE:ATEN)
No of HFs: 26
Total Value of HF Holdings: $109 Million
ATEN shares currently trade at $9.93. The top hedge fund holder of this stock is Eric Singer’s VIEX Capital Advisors which had $48.9 million invested in the stock at the end of September. ATEN recently won an industry award for multi-cloud security and AI/ML DDoS protection. Paul Nicholson, senior director of product marketing at A10 Networks said,
“It is gratifying to receive these awards by Cyber Defense Magazine and Info Security Products Guide. These awards are a demonstration of our leadership in providing secure application services with connected intelligence. A10 is working hard to deliver innovative technology that addresses the evolving customer needs for multi-cloud, edge-cloud and 5G environments with high performance and scale,”
1. Hewlett Packard Enterprise Co (NYSE:HPE)
No of HFs: 34
Total Value of HF Holdings: $726 Million
At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey were long for this stock. The company is known for its hardware products. Recently, the company teamed up with EditShare to develop high-quality media management, storage solutions. Sunil Mudholkar, vice president of product, EditShare said,
“EditShare customers can look forward to an increased pace of innovation, while taking advantage of HPE’s forward-looking technology roadmap,”. “HPE has a deserved reputation for building high performing, dependable and cutting-edge servers and storage solutions. Joining forces allows us to focus on our award-winning open software solutions and push the flexibility, scalability, and performance of media-optimized software technology on standard IT hardware.”