Which shares should I buy to join the $13.1trn 5G revolution?

5G is on track to becoming a multi-trillion-dollar industry, but which shares should I buy to profit from this once-in-a-decade opportunity?

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5G shares are becoming quite a hot topic within the investing community. While many consider it a faster mobile network for streaming movies, it’s far more revolutionary than most people think. 

Beyond being around 20 times faster than 4G, the technology is already being deployed across the automotive, manufacturing, healthcare and agricultural industries, just to name a few. Why? Because the network allows for significantly improved productivity through automation, communication, and data processing. 

In fact, an investigation by Accenture revealed 5G could result in 80% fewer car accidents each year and increase crop yields by 15%. And that’s just by 2025. By 2035, an IHS Markit report forecasts that the sector will be worth $13.1trn, driving over 10% of global GDP growth!

This could be one of the biggest investing opportunities of the decade. But which 5G shares should I buy? I’ve spotted one I like and another I’m avoiding. Let’s explore.

One to steer clear of: BT Group

To many, BT Group (LSE:BT-A) would seem the obvious choice for investing in the 5G space. After all, it does own and operate the largest telecommunications network in the UK. And in a recent earnings report, 5G deployment has been the primary growth driver for this business. But, personally, I’m not going anywhere near it.

I can’t deny the firm has made solid progress throughout 2021. Its 5G customer base is now over 5.2m, and its network has 40% coverage across the country. This is probably why the stock is up nearly 40% over the last 12 months. So why is it on my 5G shares-to-avoid list?

As I indicated earlier, telecommunication only scratches the surface of this future multi-trillion-dollar industry. And, unfortunately for BT, while its 5G operations may be expanding rapidly, the group has other less impressive business segments dragging its profits down. Not to mention the massive pile of debt it has to contend with.

That’s why I’m far more interested in another business that most investors have probably never even heard of.

5G shares worth buying: XP Power

For those unfamiliar with XP Power (LSE:XPP), this is a manufacturer specialising in power converters. What on earth does that have to do with 5G? Directly, nothing. Indirectly, it’s at the core of the entire industry.

To access the 5G networks, new hardware is required. This is one of the reasons why the demand for semiconductor chips is so high at the moment. And it’s why management has recently begun targeting opportunities within the semiconductor manufacturing sector, providing its technology to chipmakers looking to ramp up and improve production capabilities. So far, this new strategy seems to be working.

In 2020 alone, revenue from this division grew 86%! What’s more, the firm has estimated that semiconductor-related income will continue to surge by a compounded annual growth rate of 47% over the next five years. And while there is debt on the balance sheet, it’s far less problematic compared to BT’s pile of obligations.

Nothing is risk-free, of course. XP Power does have some fierce competition to fend off. Yet, so far, it’s expanding its ground rapidly. And that’s why it’s on my list for 5G shares to add to my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended XP Power. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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