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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 communications sector include Facebook Inc. (FB), Comcast Corp. (CMCSA), and T-Mobile U.S. Inc. (TMUS). The COVID-19 pandemic has sharply boosted user activity for many entertainment and streaming services, while also causing plunging advertising at some companies.
Communications stocks, as represented by the Communications Select Sector SPDR ETF (XLC), have outperformed the broader market. XLC has provided a total return of 23.1% over the past 12 months, above the Russell 1000’s total return of 17.9%, as of November 18, 2020. All statistics in the tables below are as of November 19.
Here are the top 3 communications stocks with the best value, the fastest 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.
Source: YCharts
- GCI Liberty Inc.: GCI Liberty provides telecommunications services, including broadband, television, connection and installation, and more. The company announced in August that it reached an agreement with Liberty Broadband Corp. (LBRDA) under which Liberty Broadband will acquire GCI Liberty in a stock-for-stock merger. The combination is expected to close during the first half of 2021.
- Lumen Technologies Inc.: Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers communications services, including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.
- Nexstar Media Group Inc.: Nexstar Media Group is a television broadcast and digital media company. It is focused on the acquisition, development, and operation of television stations, interactive community websites, and digital media services in medium-sized markets throughout the U.S. The company announced in September the appointment of Thomas E. Carter to the roles of President and Chief Operating Officer (COO). Mr. Carter will also retain his position as Chief Financial Officer (CFO).
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.
Source: YCharts
- Zoom Video Communications Inc.: Zoom Video Communications is a provider of video-first communication platform and Web conferencing services. It offers cloud-based HD video conferencing, mobility, and Web meetings.
- IAC/InterActiveCorp.: IAC/InterActiveCorp (Dotdash, including Investopedia.com, is a wholly-owned business of IAC/InteractiveCorp) is a media holding company that, through its subsidiaries, provides media and Internet services. Its business segments include ANGI Homeservices, Vimeo, Search, Emerging & Other, and Dotdash. The company posted net earnings (including net earnings attributable to non-controlling interests) growth of 911.3% on revenue growth of 11.8% in Q3 2020, which ended September 30, 2020. The company’s net income received a major boost from a $227.7 million after-tax unrealized gain in the value of the company’s 12% stake in MGM Resorts International (MGM). In August, IAC/InterActiveCorp said it spent more than $1 billion to build the MGM stake, aimed at helping MGM expand its online gambling business.
- World Wrestling Entertainment Inc.: World Wrestling Entertainment operates as a media and entertainment company. It offers live wrestling events, television programming, advertising, licensing, and more.
Communications Stocks with the Most Momentum
These are the communications stocks that had the highest total return over the last 12 months.
| Communications Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Zoom Video Communications Inc. (ZM) | 415.04 | 118.1 | 492.2 |
| Pinterest Inc. (PINS) | 64.45 | 39.8 | 230.5 |
| Twilio Inc. (TWLO) | 278.93 | 44.8 | 174.4 |
| Russell 1000 | N/A | N/A | 17.9 |
| Communications Select Sector SPDR ETF (XLC) | N/A | N/A | 23.1 |
Source: YCharts
- Zoom Video Communications Inc.: See above for company description.
- Pinterest Inc.: Pinterest operates a social networking site that allows users to share photos, as well as small-scale animated GIFs and videos in a pinboard-style format.
- Twilio Inc.: Twilio develops communications software and a cloud-based platform for web developers. Its platform enables developers to integrate phone calls, internet protocol voice communications, and text messages into web, mobile, and phone applications. The company announced in November the completion of its previously announced acquisition of Segment, a leading customer data platform. The transaction was valued at approximately $3.2 billion.
