The fifth generation of network technology is almost here and it promises to bring us more stable connections along with faster data download. Essentially, whatever your smartphone can do now, 5G will do it faster and better. So the industry hopes everyone will want to upgrade their phones as soon as it’s available on their network.
With 5G having arrived on a small scale but being set for wider rollout 2020, even if initial take-up is slow, it will (like 4G) become the industry standard at some point. So now’s the time to turn our attention to stocks with 5G potential. Many companies will benefit from the launch of the network and I believe that this year is the time to invest to reap the rewards before prices soar.
Vodafone (LSE: VOD) is a bit of an obvious investment for those looking at 5G stocks. The company was one of the first to try out the new technology in 2017, giving it the chance to get ahead of the competition. On top of this, there seems to be hope that Vodafone could be recovering from a harsh few years. In July, the company announced that it planned to create Europe’s largest tower company. This news sent the shares soaring over 10% higher in just one day.
The good news keeps coming as analysts predict a 77% rise in earnings per share by 2020. And part of this should be due to the launch of 5G that would continue the company’s recovery story. OK, the past year or so hasn’t been too kind to Vodafone, and it found itself cutting cut dividends by 40%. However, I see this as a wise move to boost the company’s balance sheet and free up cash so it can invest more in 5G and the tower company scheme. The more money it can invest in the development of the technology, the better. Vodafone could be a top player in the 5G arena which would yield rewards for investors further down the line.
I think that it’s a good idea to take advantage of Vodafone’s current share price before 5G really comes into play.
Keywords Studios (LSE: KWS) is a technical service provider to the video game industry and could be a very wise investment when it comes to 5G. The developments 5G will bring include improved network speeds that will increase the appeal of already popular mobile gaming still further. Gaming will be more accessible than ever and Keywords Studios should reap the rewards of this popularity.
Gaming has exploded in recent years with huge technological advances and the rise of gaming ‘influencers’ encouraging more young people to play. This has benefitted Keywords Studios with its value soaring a huge 600% since 2016. Furthermore, the insane popularity of Fortnite helped boost the company’s pre-tax profit last year by 65% — a strong example of the direct correlation the popularity of gaming has on the company.
Keywords Studios’ annual earnings per share have risen a huge 49% for the past three years and I think that this figure could be even more impressive after the launch of 5G.
fional has no position in any of the shares mentioned. The Motley Fool UK has recommended Keywords Studios. 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.