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Mobile communication has been a booming industry for several decades and Goldman Sachs analysts believe there is plenty more room for investor profit in this sector. The investment firm recently upgraded its outlook on three of America's biggest telecommunication stocks. Keep reading to discover which stocks made Goldman's hot list and why.
An analysis from Data Bridge Market Research predicts a 2.80% compound annual growth rate (CAGR) for the mobile telecom industry until 2029. If those predictions are correct, the mobile market's annual value will have exploded from $1.65 trillion in 2021 to an estimated $2.07 trillion by 2029. These growth predictions help explain why Goldman has issued a "buy" rating on three top telecom stocks.
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AT&T
AT&T is a legacy player in the telecommunications sector, making investors rich since the days of landline telephones. They've used that position to grow a sizable market share in the mobile sector and Goldman expects this stock to continue delivering. Goldman's analysts are predicting improved revenue in the wireless sector and a possible stock buyback for AT&T.
Goldman was also persuaded by AT&T management's positive outlook during a recent conference call. They summed up their thoughts on AT&T by saying, “We believe investors are bullish on the stock given solid commentary throughout the quarter with no apparent shift in management tone. We think expectations are modestly elevated given the constructive wireless backdrop, offset by likely lower consumer broadband expectations given the union strike impact." That's why AT&T was Goldman's top "buy" pick.
Verizon
Next up is Verizon, another giant player in the mobile communications market. Goldman's analysts believe Verizon is set up to have a strong quarter thanks to upgraded wireless service and a corresponding increase in new subscriptions. They noted room for improvement in some aspects of Verizon's operations, but overall, Goldman still thinks Verizon shares will pay off for investors.
Goldman summarized its thoughts on Verizon by saying, “We think investors are expecting an in-line quarter and we expect Verizon to hit consensus estimates, although we believe a miss on phone net additions would create a headwind for the stock through year-end.”
T-Mobile
Lastly is T-Mobile, on which Goldman has a "constructive" outlook. Goldman explained its position on T-Mobile: “We expect upside to the Street for 3Q postpaid phone net additions, with an uptick to 2024 guidance." Goldman also seems to believe that T-Mobile has an opportunity for longer-term performance that some investors may overlook.
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Another Way to Invest in Mobile and Wireless Communications
Goldman's analysis is certainly worthy of consideration, but some investors just don't feel comfortable with the stock market’s volatility. If you fall into that category but still want to invest in mobile and wireless communications, there is another way. Several real estate investment trusts (REITs), such as American Tower, operate satellite towers and communications infrastructures that make mobile technology possible.
These REIT shares are traded on public exchanges, but every share you buy gives you proportional ownership of the real estate assets in the REIT portfolio. REITs offer opportunities for share value appreciation and passive income through dividends. As the wireless sector grows, REITs like American Tower and Digital Realty Trust could give you the best of both worlds.
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This article Goldman Just Raised Its Outlook For These Hot Telecom Stocks originally appeared on Benzinga.com