A new year can mean a fresh start. And for many people, that means taking a close look at their budget and changing their Wi-Fi plan. It’s big business, and multiple companies are competing for your money.
Many of these companies also want your investment funds. And in this article, we take a look at three of the biggest names in wireless: T-Mobile US, Inc. (NASDAQ:TMUS), AT&T Inc. (NYSE:T)and Verizon Communications Inc. (NYSE:VZ) and ponder why every stock could be a buy in 2023.
strengthen a weakness
Investors love to see companies turn an area of weakness into a strength without hurting the rest of their business. That could happen at T-Mobile.
Of the three wireless stocks covered in this article, TMUS is the only one that has posted consistent growth since the pandemic. However, much of that growth came from its merger with Sprint. At times like these, it’s natural for investors to wonder what you’ll do for an encore.
For T-Mobile, that splash could stand in the way of higher profit margins. The company’s sales aren’t expected to be particularly impressive over the next five years. But revenue is a different story.
Analysts are forecasting that the company will grow earnings per share (EPS) by an average of more than 86% per year over the next five years. This contrasts with a growth rate of almost 10% (9.52%) over the past five years.
This likely includes efficiencies once Sprint is integrated into its operations. But whatever the reason, earnings growth like this would help allay any concerns about the company’s high valuation.
Addition by subtraction
The story isn’t that exciting for AT&T, but whenever a company can say the worst may be over, it’s usually a positive sign. In the eyes of many investors, AT&T had gone astray with acquisitions like Warner Media and DirecTV. The company had grown, but questions about long-term growth arose. And even the company’s sizeable dividend didn’t keep investors interested.
But AT&T sold its Warner Media business in 2021. Then, last year, it spun off DirecTV into a separate business. This has allowed the company to focus more on 5G, and so far investors seem slightly drawn to a leaner company with an attractive valuation.
That attraction will only go so far. As Matthew North points out, the company performs poorly on several fundamental metrics. And with revenue and growth forecasts likely to decline over the next five years, it remains to be seen whether investors will stay.
Looking for new sources of income
A year ago, Verizon looked like a bull’s eye to income investors. The stock didn’t do much price-wise, but the company paid a great dividend. But the stock fell sharply in 2022 and the company struggled through a highly competitive market.
That’s because Verizon is relying almost exclusively on the consumer business for now. The good news is that subscriber metrics have improved in the most recent earnings report. Additionally, with the 5G rollout largely complete, the company may be able to improve its profit margins.
But what might get the needle moving for Verizon is its new content partnerships with Disney+Discovery+ and YouTube TV, which will help generate additional revenue streams for the company.
Before you consider T-Mobile US, here’s what you should hear.
MarketBeat tracks Wall Street’s best-in-class, top-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now, before the broader market follows through… and T-Mobile US wasn’t on the list.
While T-Mobile US is currently rated a Buy by analysts, top analysts believe these five stocks are better buys.
Check out the five stocks here