As the coronavirus pandemic rages havoc, demand for cloud-based business services and video-streaming services is on the rise. In fact, consumers demand faster Internet speed with higher bandwidth, giving a boost to the communication service industry.
With both consumers and businesses using the network, demand for quality networking equipment and service keeps growing. Faster data transfer demand constantly fuels growth of optical networks, with 5G taking center stage.
Remote Working Spurs Demand
Remote working is helping several businesses function at full capacity even as the pandemic is keeping everyone indoors. In fact, this boosts the rich communication services market that provides instant messaging, chat, live video, content sharing, file transfer, and IP video calls services across devices on any network.
The market’s scope goes beyond individual customers as businesses now use its services for advertisements, promotions, customer retention, social networking, global interoperability and collaboration, among others. Per a MarketsandMarkets report, the global rich communication services market size is projected to reach $3.3 billion by 2024 from $1.6 billion in 2019, at a CAGR of 15.1%.
Apart from communication and networking, the new normal remote working trend has boosted the communication components industry as a whole. Some firms offer audio products, glass substrates for monitors, notebooks, mobiles, tablets while many focus on digital platform for hands-free communication. From innovative audio products to secure file transfer, alert and alarm management, the industry has a wide scope and will maintain the uptrend as the pandemic keeps compelling employees to work from home.
Infrastructure Bill to Boost 5G
The remote working trend has also boosted the telecom segment for the development of scalable network architecture, demand-driven video solutions and broadband access equipment. And, 5G plays a critical role in this arena.
Deployment of 5G network has stirred up telecom service providers, with many leaning toward fiber optic cableto meet demand for cloud-based business data and video-streaming services for individuals staying at home. After all, 5G is way faster than 4G, with more network capacity and better spectrum technology.
5G networks use mid-band as well as higher frequency airwaves, which require more equipment, cell towers and fiber-optic wiring than the previous generations. Hence, as demand for 5G grows, companies offering 5G technology infrastructure will also see a boom.
Fiber-optic technology providers are major part of the 5G wireless network supply chain, which mostly contributes to thecommunication service industry. Along with that, small cell radio antennas and radio access network equipment are required to link network to cloud computing infrastructure.
On Jun 16, Trump administration announced prospects of a $1-trillion dollar infrastructure package as a relief from the pandemic slump. A portion of the package would be allocated for 5G wireless infrastructure and rural broadband. This also boosts the industry further.
The rise in demand for seamless data connectivity due to higher broadband utilization is likely to propel the industry.
Per a MarketsandMarkets report, the 5G infrastructure market is expected to rise from $784 million in 2019 to $47,775 million by 2027, at a CAGR of 67.1%.
5 Stocks to Buy
Given the prospects of communication services driven by solid demand due to remote working trends, it is prudent to invest in these five stocks.
Acacia Communications, Inc. ACIA develops, manufactures and sells high-speed coherent optical interconnect products. The company’s expected earnings growth rate for the current year is 27.4% against the Zacks Communication – Components industry’s estimated earnings decline of 16.5%.
The Zacks Consensus Estimate for its current-year earnings has climbed 16.8% over the past 60 days. Acacia Communications sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United States Cellular Corporation USM provides wireless telecommunications services.It also provides machine to machine solutions and software applications in the areas of monitor and control, business automation/operations, communication, and asset management and more.
The company’s expected earnings growth rate for the current year is 6.3% against the Zacks Wireless National industry’s projected earnings decline of 6.9%. The Zacks Consensus Estimate for its current-year earnings has climbed 33% over the past 60 days. United States Cellular flaunts a Zacks Rank #1.
Turtle Beach Corporation HEAR operates as an audio technology company. It develops, commercializes, and marketsgaming headsets, keyboards, mice, and other accessories for the personal computer peripherals.
The company’s expected earnings growth rate for the current quarter is more than 100% against the Zacks Communication – Components industry’s projected earnings decline of 14.5%. The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days. Turtle Beach carries a Zacks Rank #2 (Buy).
Ooma, Inc.’s OOMA platforms serve as a communications hub, which offers cloud-based communications solutions, smart security, and other connected services.
The company’s expected earnings growth rate for the current quarter is more than 100% against the Zacks Communication – Components industry’s projected earnings decline of 14.5%. The Zacks Consensus Estimate for its current-year earnings has risen more than 100% over the past 60 days. Ooma carries a Zacks Rank #2.
ATN International, Inc. ATNI provides wireless services, including voice and data services to retail customers. The company’s expected earnings growth rate for the current year is 9.1% against the Zacks Wireless National industry’s projected earnings decline of 6.9%. The Zacks Consensus Estimate for its current-year earnings has climbed 8.3% over the past 60 days. ATN International carries a Zacks Rank #2.
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