Top Communications Stocks for June 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 slightly underperformed the broader market. XLC has provided a total return of 43.4% over the past 12 months, below the Russell 1000’s total return of 44.7%. These market performance figures and all statistics in the tables below are as of May 20, 2021.

Here are the top 3 communications stocks with the best value, the fastest growth, and the most momentum.

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.

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• 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. On May 20, the company announced that it had reached a multi-year agreement with The CW to renew affiliations in 37 markets covering roughly a third of the U.S. and including New York, Los Angeles, and Houston.
• ViacomCBS Inc.: ViacomCBS is a global multimedia company focused on creating premium content and experiences for audiences across the world. The company provides cable networks, content production and distribution, television stations, and digital streaming services. It also operates other internet-based businesses as well as consumer publishing. For Q1 FY 2021, the company reported operating income growth of 69.4% on revenue growth of 14.0% year-over-year (YOY) as streaming advertising and subscription revenue soared.
• Fox Corp.: Fox Corp. produces and licenses a variety of entertainment, sports, and news content for distribution across cable television, direct broadcast satellite, online video, and other distributors. The company also manages broadcast studios and theaters.

These are the top communications stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

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• 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. On May 19, the company announced the launch of a new platform, Zoom Events, starting this summer. The new offering will provide event organizers the ability to produce ticketed, live events for broadcast using Zoom for audiences of any size.
• The Interpublic Group of Companies Inc.: The Interpublic Group of Companies is a group of advertising and marketing service companies. Interpublic Group operates across industries including independent media buying, direct marketing, marketing research, public relations, and advertising. Net income for Q1 FY 2021 was more than 35 times that of Q1 FY 2020, while net revenue increased by 2.8% for the same period.
• DISH Network Corp.: DISH provides direct broadcast satellite subscription television services, as well as interactive television programming, audio programming, and similar products.

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

^{Source: YCharts}

• 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. The company reported a net loss of $21.7 million for Q1 2021, an improvement relative to net loss of $141.2 million one year prior. Revenue increased by 78.4% over the same period. Pinterest attributed the performance to growth in international business and “increased adoption from medium and small advertisers.”
• Roku Inc.: Roku builds and markets wireless enabled devices used to stream audio and video content from the internet to home entertainment systems. The company serves customers around the world.
• News Corp.: News Corp. is a mass media and information services company. It has operations in book publishing, digital real estate, cable network programming, and news and information. In early May, News Corp. completed the $349-million, all-cash acquisition of the Books & Media segment of Houghton Mifflin Harcourt, to be operated by HarperCollins Publishers. The segment has a backlist of roughly 7,000 titles focused on the lifestyle and children’s markets.

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