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The communications sector is comprised of a broad range of companies that sell phone and internet services via traditional landline, broadband or wireless. The sector also includes companies that are major creators and producers of movies, television shows, and other content. Well-known companies in the sector include Facebook Inc. (FB), Comcast Corp. (CMCSA), and Netflix Inc. (NFLX). Communications stocks, as represented by the Communications Services Select Sector SPDR (XLC), have slightly outperformed the broader market, providing investors with a total return of 23.9% compared to the S&P 500’s total return of 22.6% over the past 12 months. These market performance numbers and the statistics in the tables below are as of February 21 for value and momentum stocks, and as of February 24 for growth stocks.
Here are the top 3 communications stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Communications Stocks
These are the communications stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
ViacomCBS Inc.: ViacomCBS is a global multimedia company focused on creating entertainment content for viewers around the world. The company provides cable networks, content production and distribution, television stations, and digital streaming services. It also operates other internet-based businesses as well as consumer publishing. ViacomCBS announced at the end of January that George Cheeks has been appointed to the roles of President and Chief Executive Officer (CEO) of CBS Entertainment Group, effective March 23, 2020. He will succeed current Chairman and CEO of CBS Joe Ianniello, who will be leaving the company.
Discovery Inc.: Discovery is a global media company providing content across a number of platforms, including pay-television; free-to-air and broadcast television; and digital distribution and content licensing arrangements.
Electronic Arts Inc.: Electronic Arts is best known as a video game company. It develops, publishes, and markets video game software for consoles, personal computers, mobile phones, and tablets.
Fastest Growing Communications Stocks
These are the communications stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Fox Corp.: Fox is a television company that operates cable news channels such as Fox News and Fox Sports. They also operate a series of broadcast television stations throughout the U.S. Fox was spun off from 21st Century Fox in March, 2019. The spinoff was related to Walt Disney Co.’s (DIS) purchase of 21st Century Fox and its family of film and TV entertainment properties, including its movie studios.
Netflix Inc.: Netflix is a movie and TV production, streaming, and rental business. It distributes its product mainly through its own online streaming platform, but also does DVD and Blu-ray rentals by mail.
Verizon Communications Inc.: Verizon is a telecom conglomerate operating cable television, landline, internet, and cellular phone service.
Communications Stocks with the Most Momentum
These are the communications stocks that had the highest total return over the last 12 months.
|Communications Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Charter Communications Inc. (CHTR)||539.22||113.2||54.2|
|Activision Blizzard Inc. (ATVI)||64.00||49.2||50.8|
|T-Mobile U.S. Inc. (TMUS)||99.50||85.3||36.8|
|S&P 500 (SPY)||N/A||N/A||22.6|
|Communications Services Select Sector SPDR (XLC)||N/A||N/A||23.9|
Charter Communications Inc.: Charter Communications is a cable operator and broadband communications services company providing video, Internet and voice services to residential, and business customers. The company also sells video and online advertising, fiber-delivered communications, and information technology solutions to large enterprise customers. Additionally, Charter owns and operates regional sports networks and local sports, news, and community channels.
Activision Blizzard Inc.: Activision Blizzard is engaged in the development and publication of interactive entertainment. The company develops content and services across a variety of gaming platforms, including video game consoles, personal computers, and mobile devices.
T-Mobile U.S. Inc.: T-Mobile provides wireless communications services under the T-Mobile and MetroPCS brands. The company offers prepaid wireless voice, messaging and data services, and wholesale wireless services. T-Mobile announced last week that it has entered an agreement with Sprint Corp. (S) to amend the terms of the merger between the two companies, but that the changes would have no impact on the expectations of the synergies, long-term profitability, and cash generation of the newly formed entity. The announcement comes following a ruling by the Federal District Court in New York earlier this month approving the merger.
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