Top Communications Stocks for March 2021

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, represented by the Communication Services Select Sector SPDR ETF (XLC), have outperformed the broader market. XLC has provided a total return of 27.0% over the past 12 months, above the Russell 1000’s total return of 20.5%, as of February 19, 2021. All statistics in the tables below are as of February 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.

ource: YCharts

• Telephone and Data Systems Inc.: Telephone and Data Systems is a diversified telecommunications company that operates in the cellular, local telephone, and personal communications areas. The company provides services throughout the U.S. Telephone and Data Systems reported a 3.0% year-over-year (YOY) increase to total operating revenues and a 6.7% YOY increase in net income for Q4 2020. Improvement in both areas was driven by TDS corporate, intercompany eliminations, and other business operations.
• Nexstar Media Group Inc.:: Nexstar Media Group is a television broadcast and digital media company. It has 198 television stations, including partners in 116 markets capable of reaching 68% of U.S. households. 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.
• United States Cellular Corp.: United States Cellular is a wireless telecommunications services provider. The company offers national plans including voice, messaging, and data usage services. It also provides smartphones, tablets, and other wireless devices to customers throughout the U.S. The company reported Q4 2020 results on February 18, including a 2.0% YOY improvement in total operating revenues and a 61.1% YOY decline in net income. Net income for FY 2020 increased by 75.2% versus FY 2019. Laurent Therivel, president and CEO, said that the growth in total operating revenues combined with maintenance of operational and cost discipline allowed the company to increase its profitability for FY 2020 in spite of significant increases in data usage.

Fastest Growing Communications Stocks

These are the communications stocks with the highest 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

• 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 latter of which operates a portfolio of digital brands, including Investopedia. For Q4 2020, IAC/InterActiveCorp reported a 26.6% YOY increase on an operating loss of $24.4 million versus a loss of $16.4 million for Q4 2019. IAC said the large increase in net income reflects, “the value of our investment in MGM Resorts International.” Vimeo raised $300 million of primary equity during the quarter. It will be spun off to IAC shareholders in a transaction expected to close in Q2 2021.
• 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.
• Nexstar Media Group Inc.: See above for company description.

Communications Stocks with the Most Momentum

These are the communications stocks that had the highest total return over the last 12 months.

Source: YCharts

• Zoom Video Communications Inc.: See above for company description.
• Roku Inc.: Roku is a streaming media service provider and maker of consumer electronic products. The company offers wireless enabled devices to stream audio and video content from the internet to various home entertainment systems. Roku offers its products and services globally. On February 18, Roku reported total net revenue gains of 58.0% YOY and a total gross profit increase of 89.0% YOY for Q4 2020. The company’s active accounts grew by 38.8% YOY for the same period. The quarter saw record revenue, gross profit, and adjusted EBITDA for Roku.
• 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.

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