5 Best 5G stocks to Buy in September 2021

The transition to 5G is among the most prominent investing themes for the next decade. As the world moves towards a digital future, 5G technology would play a pivotal role.

The 5G ecosystem is very diversified and includes software as well as hardware companies. Also, there are ancillary industries that would benefit from the growing 5G adoption. Several US, as well as foreign companies, are at the forefront in the 5G transformation. Here are the five best 5G stocks that you can buy in September 2021.

1. Nokia (NYSE: NOK)

Finnish company Nokia is among the best 5G stocks to buy for the long term. The stock was quite popular on Reddit group WallStreetBets earlier this year which led to a steep rise in its stock price. It went on to hit a 52-week high of $9.79 but since fallen sharply from the peaks. However, the stock is still up 44% year-to-date (YTD).

Nokia has been losing market share to Ericsson as well as Huawei. However, given the continued clampdown on Chinese 5G companies by the US, companies like Nokia could end up gaining market share in the future. The Trump administration had warned allies against allowing Chinese 5G companies for telecom gear. The Biden administration has been equally, and at times even harsher on China. More U.S. allies could shun Chinese 5G companies in the future which makes non-Chinese 5G stocks like Nokia a good proposition.

NOK stock price forecast

Of the 30 analysts covering Nokia stock, 20 rate it as a buy while nine have a hold rating. One analyst has a sell or equivalent rating on the stock. Its median target price of $7.12 is a premium of 26.9% over current prices. The stock has a street-high target price of $8.27 which is a premium of 47.4%. Nokia even trades 2.5% below the street low target price of $5.75.

Nokia is a good turnaround 5G stock to buy

Earlier this year, Goldman Sachs issued a bullish note on Nokia stock. The brokerage raised NOK stock from a neutral to buy citing “better” 5G spending and said that the company will “regain their place as a key tech enabler for cellular connectivity.” Cowen also upgraded the stock to an outperform from market perform while raising the target price from $5 to $8. Cowen is bullish on the company’s transformation under the new CEO Pekka Lundmark.

Commenting on the transformation, Lundmark said that “Nokia is repositioning itself to deliver sustainable, profitable growth, adapting our business to lead in an increasingly digitalized world. We have a clear and detailed plan for how we will reset the business, accelerate competitiveness and scale up our lead in the markets we choose to play in. This plan will enable us to deliver double-digit comparable operating margins in 2023.”

Overall, Nokia is a good turnaround 5G stock to buy in September and bet on the 5G revolution.

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2. Apple (NYSE: AAPL)

Smartphone companies like Apple are among the biggest beneficiaries of higher 5G adoption. Sales of 5G smartphones are rising which bodes well for Apple. The growing demand for 5G phones is fuelling a smartphone supercycle and Apple is among the companies that would benefit from the trend.

Wall Street is also bullish on Apple stock

Wall Street analysts are also bullish on Apple stock and its median target price of $169.28 is a premium of 13.7%. It has 32 buy, 10 hold, and two sell ratings. Meanwhile, while most of the analysts are bullish on Apple stock, Pierre Ferragu of New Street Research is the most bearish.

He expects a severe pullback in Apple stock as we saw in January 2019 when Apple had lowered the revenue guidance. “If iPhone shipments come down by 15% below expectations … [it is] going to trigger a very, very significant selloff, very similar to what happened in early 2019,” said Ferragu.

Meanwhile, Berkshire Hathaway chairman Warren Buffett is among those who back Apple stock. The company is the largest holding in Berkshire Hathaway’s portfolio of publicly traded companies.

While Apple is not a pure-play 5G stock, it is among the best ways to play the 5G story.

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3. Broadcom (NYSE: AVGO)

Chipmaker Broadcom is another good 5G stock to buy. Broadcom released its earnings earlier this month which were higher than what analysts were projecting. The company’s revenues increased 16% year-over-year to $6.78 billion in the fiscal third quarter. The topline growth was slightly ahead of what analysts were expecting. It reported an adjusted EPS of $6.96 in the quarter which was ahead of the $6.88 that analysts were expecting. It also raised the guidance after the strong performance.

 

Sounding an optimistic tone, Hock Tan, Broadcom’s CEO said “Broadcom delivered record revenues in the third quarter reflecting our product and technology leadership across multiple secular growth markets in cloud, 5G infrastructure, broadband, and wireless.”

Why Broadcom is a great 5G stock to buy

Chipmakers like AVGO are good 5G stocks to buy. The chip shortage situation is expected to continue well into 2022. Also, the demand side of the equation for semiconductors looks strong amid the digital transformation and the 5G supercycle. AVGO has a dividend yield of 2.8% which is almost twice the S&P 500’s dividend yield.

AVGO stock is up almost 20% in the year and consensus estimates call for an upside of 10.3% over the next 12 months. Overall, AVGO looks like a good 5G stock to buy in September.

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4. Verizon (NYSE: VZ)

Verizon stock is down 7.3% so far in the year and is underperforming the markets. Notably, Buffett disclosed a big stake in Verizon in its fourth-quarter 2020 13F. Berkshire Hathaway holds a 3.8% stake in Verizon. The company is the seventh-largest holding for Berkshire Hathaway.

Verizon dividend make it an attractive 5G stock to buy

Verizon has already deployed its 5G network in several US markets. The company has an attractive dividend yield of 4.5%. If you are looking at a good 5G stock to buy which also pays an attractive dividend yield, VZ stock would fit the bill.

Meanwhile, Wall Street analysts are not too bullish on VZ stock and only seven of the 27 analysts covering the stock rate it as a buy. 18 analysts rate it as a hold while the remaining two analysts have a sell rating on the stock. Its median target price of $60.2 implies an upside potential of 10.3% over current prices.

Looking at the charts, Verizon is facing strong resistance at the 50-day SMA (simple moving average) and has been making lower highs and higher lows which is a bearish indicator. That said, looking at the tepid valuations and the attractive dividend yield, Verizon looks like a good 5G stock to buy.

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5. Nvidia (NYSE: NVDA)

Nvidia is another good stock to buy and play the 5G story. The stock was among the best performing S&P 500 constituent last year and is outperforming in 2021 also. The stock trades at an NTM PE of 51.6x. Nvidia is among those tech companies which have seen a serious rerating over the last couple of years.

The company’s chips go in several 5G-related solutions which make it a good stock to play the 5G industry. The stock is looking bullish on the charts also and trades very near its 52-week highs. Wall Street analysts have given Nvidia a median target price of $230 which is a premium of only 3% over the next 12 months.

That said, analysts’ action has generally lagged Nvidia’s target price. In the medium to long term, the acquisition of Arm Holdings, which is facing scrutiny in the UK, could add value for investors.

Nvidia is not only a good 5G stock but also a way to play multiple themes from gaming to digital transformation. While the stock could appear somewhat overvalued at current levels, those looking to buy Nvidia at a lower price have found themselves on the wrong side of the stock’s price action.

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