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By now, you've heard all about the potential of 5G. But a little-known government process last month shows just how big it could be. And one of the best 5G stocks today could be collecting a slice of the entire industry's growth.
The latest U.S. Federal Communications Commission (FCC) spectrum auction started a little over one month ago, and now, after 67 rounds as of last Friday and a little over $4.5 billion raised, things look to be slowing down. I started writing about this auction as it was getting started over at Strategic Tech Investor, and now that we are coming to an end, it makes sense to talk about how exciting and valuable this spectrum really is.
This auction has defied many analyst expectations and is already 3.5x above the lower end of estimates for how much money would be raised. It is no surprise to me as there are over 200 companies bidding on licenses.
This means that not only are telecom companies looking to build out their networks, but even companies like Deere & Co. (NYSE: DE) and Chevron Corp. (NYSE: CVX) are interested in the spectrum for their own private networks.
While spectrum could take years to deploy, the major advantage of this 5G auction over any in the past is that this spectrum can be deployed right away. In fact, companies like Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T) and T-Mobile US Inc. (NASDAQ: TMUS) have already started testing approved equipment so that they can improve their networks right away. While it will prove beneficial to whoever wins spectrum in this auction in major cities, it has also shown how in-demand 5G is.
But one company could see a slice of all this growth. Every company planning to build out its 5G network will need what this firm offers.
That makes it one of the best 5G stocks on the market right now...
This Top 5G Stock Offers Something for Everyone
Keysight Technologies Inc. (NYSE: KEYS) continues to be well positioned for the enormous growth of the 5G economy. Its most recent earnings call showed how the bulk of the company's 5G opportunity is still ahead of it.
5G networks are just starting to cover a broad swath of the United States. That means new antennas along with other network equipment that support 5G needs to be deployed. Not just for wireless networks - 5G has dozens of use cases like fully autonomous cars, remote surgery, and farming sensors to track crops.
For wireless, the story is really just beginning. The global number of 5G subscriptions is expected to top 190 million by the end of 2020 and 2.8 billion by the end of 2025, according to a report by Ericsson (NASDAQ: ERIC). That is over 1,000% growth and could be accelerated by government spending and 3G networks shutting down. Verizon has publicly stated it is retiring its 3G network at the end of 2020, and this could push millions of customers into buying new phones.
This all leads back to Keysight. Every time chip and equipment manufacturers want to develop and make sure their products work correctly, they go to Keysight. This growth helped the company to beat earnings per share by over 40%. As production capacity has gotten back to nearly 100% by the end of the quarter, it also shared guidance well ahead of analyst forecasts, something that few companies are doing right now.
Amid the pandemic, Keysight has also continued to develop products for its end markets and recently announced PathWave Design 2021, a 5G and mmWave software solution for engineers to "accelerate 5G design, simulation, and verification workflows." This just shows the company's dedication to the growing industry and where it can continue to make profits.
There is a reason why 5G was mentioned 25 times during Keysight's earnings call, and it's because it is one of the hottest trends in tech.
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About the Author
Alex Kagin is the Director of Technology Investing Research at Money Map Press. He has spent the last decade working in equity research, most recently with Energy Capital Research Group (ECRG), where he led technology stock research along with working as part of a team developing a customizable financial data platform for securities analysis.
Prior to joining ECRG, Alex spent 8 years at DeMatteo Research, a boutique primary research firm and broker-dealer servicing the institutional investment community. He managed the Tech, Media, and Telecom vertical where he spent time connecting with hundreds of tech executives and hedge funds to get the pulse of the market.
Alex has a B.S. in Economics from American University and previously held Series 7 and 63 security licenses.