This Slow-and-Steady Sector Could Unlock Big Profits In the 5G Boom

Lost among the shuffle of some of today’s tech trends, the 5G network continues to roll out. The technology includes faster download speeds and a better ability to use video and other tools for communication, work, and play while on the go.

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  • It’s a trend combining a number of things from wireless chips to the location of cell towers. With many ways to profit, investors need a way to narrow down opportunities.

    One such way might be to look at companies that offer 5G services on a recurring revenue model. One of the most obvious plays there are the telecom carriers themselves. It’s a space that has been undervalued compared to the rest of the market right now.

    Among the big carriers, Verizon (VZ) looks like it has the best valuation as a carrier, as AT&T (T) looks to shed the media businesses it’s spent years building up (and cutting its dividend in the process).

    Action to take: Shares of the telecom are under 10 times earnings right now, and have dipped 13 percent in the past year, but look poised for better returns in the quarters ahead.

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  • Today’s buyers can get into a slowly-growing dividend as well, with a hefty starting yield of 4.9 percent right now.

    For traders, have been a bit lackluster all year, but may have started to trend up in the past few weeks. That could bode well for a trade like the January $55 calls, which last went for about $0.40 and could deliver a mid-to-high double-digit yield.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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