During the pandemic, telecommunications companies like Verizon have done relatively well, due in large part to the increased number of people using their devices at home. This means more devices, more data used, and more home Wi-Fi plans through telecom companies like Verizon.
In terms of 5G, though, Verizon has fallen far behind other telecommunication companies, like T-Mobile (TMUS) and AT&T (T). TMUS and T already rolled out their 5G networks, but Verizon didn’t start actively expanding until this month. The reality is that only 200 million Americans have access to 5G, the majority of which is through T-Mobile’s low spectrum 5G connection, which barely outperforms 4G connection. Interestingly, Verizon’s biggest problem is its success: the company has 94 million customers throughout the U.S., which greatly outnumbers all of the other service providers.
Looking forward, Verizon will be increasing its 5G reach around the country and offering more 5G capable devices. This includes partnering with Apple (AAPL) with its new 5G iPhone 12. Company management is particularly excited about this deal, as during the big Apple event last week, Verizon CEO Hans Vestberg stated, “5G just got real.” Ideally, more folks will upgrade to the Apple’s 5G iPhone, which means more expensive phone plans and more money in Verizon’s pocket as early as next year.
In the meantime, Verizon’s third-quarter earnings weren’t anything to write home about.
Verizon reported third-quarter results that beat on the top and bottom lines on Wednesday morning. Adjusted earnings per share of $1.25 topped analysts’ expectations for $1.22. So, the company posted a 2.5% earnings surprise. Revenue of $31.54 billion was just shy of the estimated $31.60 billion. This represents flat year-over-year earnings growth and a $1.35 billion revenue decline from the same quarter a year ago. Total revenue also declined 1.7% year-over-year to $7.7 billion.
However, company management did raise full-year guidance. They are now expecting adjusted earnings growth between 0% and 2% and 2% revenue growth.
All told, though, these numbers weren’t good enough for my Portfolio Grader. The company’s Total Grade is a D-rating, making the stock a “Sell” right now.
The bottom line: If you’re looking for a strong 5G investment, your best bet is to look elsewhere. And I’ve got just the stock for you to consider.
A Big Play for 5G
Taiwan Semiconductor Manufacturing Company Limited (TSM) was the first dedicated semiconductor foundry in the world when it was founded in 1987. In other words, TSM does not develop or market any semiconductor products under its own brand. So, the company is never in direct competition with its customers.
Today, Taiwan Semiconductor manufactures more than 10,400 products that use 262 unique technologies for its more than 481 customers. The company manufactures semiconductors that are used for computers, consumer, industrial, communications and standard markets. In 2018, Taiwan Semiconductor’s total managed capacity reached more than 12 million 12-inch equivalent wafers.
Most recently, TSM has been making headlines as the only manufacturer of Apple’s A14 series processors that are powering the iPhone 12 and the most recent iPad. The company is building the processors on the most-recent 5-nanometer process-node, which means fast speed and higher prices.
So, it’s perfectly positioned to benefit from the rising demand for 5G. In fact, the company has positioned itself to benefit from all things 5G: smartphones, self-driving cars and the Internet of Things (IoT), just to name a few.
As far as the numbers go, the company announced earnings and revenue results for its third quarter last week. Third-quarter revenue rose 21.6% year-over-year to NT$356.43 billion and earnings jumped 35.9% year-over-year to $NT137.31 billion, or NT$5.30 per share.
In U.S. dollar terms, Taiwan Semiconductor achieved earnings of $0.90 per ADR and revenue of $12.14 billion. The analyst community was looking for earnings of $0.77 per ADR on $11.51 billion in revenue. So, TSM posted a 16.9% earnings surprise and a 5.5% revenue surprise.
Looking ahead to the fourth quarter, TSM expects revenue between $12.4 billion and $12.7 billion, which is nicely higher than the current consensus estimate that calls for $11.71 billion. Company management noted that 5G smartphone launches will continue to create “strong demand for its industry-leading 5-nanometer technology.”
Given the company’s strong fundamentals, it also earnings an overall A-rating in Portfolio Grader, making the stock a “Strong Buy” right now.
So, if you’re looking for a 5G play, TSM is the clear winner here. And my Platinum Growth Club subscribers are already reaping the benefits. I added TSM to my Model Portfolio back in May, and it’s since skyrocketed about 70%. And thanks to the company’s strong earnings, I see even bigger gains ahead.
But it’s not just TSM I’m excited about. Our own Model Portfolio and Buy Lists remain well-positioned to benefit from the flood of cash I expect to pour into the stock market. Our fundamentally superior stocks will be ripe for the picking, especially in the wake of better-than-expected third-quarter earnings. On average, our Buy List stocks have more than 20% annualized sales growth and at least 50% earnings growth. And I look for at least 20% earnings surprises on average.
So, if you’re interested in fundamentally superior, high-growth stocks that are well-positioned to rally during the third-quarter earnings season, I encourage you to check out my Platinum Growth Club. I have more than 100 stocks across all my services (I added five brand-new stocks to my Breakthrough Stocks Buy List in my October Monthly Issue and plan to add at least one more to my Accelerated Profits Buy List next week). And, as a Platinum Growth Club subscriber, you have full access to each and every one.
Of course, you don’t have to invest in all 100+ stocks. If you’d rather start small, I’ve got you covered there, too. My Platinum Growth Club service comes with my exclusive Model Portfolio. I handpick all of my Model Portfolio recommendations from the different services, so you can rest assured that you’re always invested in the crème de la crème.
If you’re interested, click here for full details. If you decide to join me here at Platinum Growth Club, not only will you have instant access to all my recommendations, but you’ll also receive my special report, Crisis Master Plan, at no extra cost to you. In this report, I’ll show you how to get ready to take advantage of a set of extraordinary financial opportunities that you might not ever see again. And this report serves as my blueprint for taking advantage of these opportunities.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
T-Mobile (TMUS), Taiwan Semiconductor Manufacturing Company Limited (TSM)