Trade Alert: Old school telecom or 5G killer?
In all my years as a technology and telecom and communications investor, I’ve never been a big fan of the major telcos — AT&T, Verizon, Cingular, SBC, Sprint, Worldcom, etc. There’s been a lot of reasons for my reticence in buying these old telcos, including each of them having had too much debt, too much competition, and the fact that most of their legacy business was built on old telecom technologies that Internet Protocol technologies have replaced over the last fifteen years.
But we’re here now, about to see the 5G Revolution hit. There is so much pent up demand for better wireless connectivity with much higher bandwidth that whoever delivers on the best and earlier roll out of 5G is likely to be squash all competitors and become a huge winner for many years to come. You all have heard me lament the lack of bandwidth when I’m live streaming on my app lately and I heard Neil Patrick Harris say the same thing on his live stream the other day — “When will these wireless providers get me the speed I need?”
The answer is those higher speeds are coming over the next year. Verizon has spent tens of billions of dollars expanding their backbone, buying wireless spectrum to run 5G and otherwise preparing to bet their company on 5G dominance.
I will say, it drives me crazy that Verizon’s been dinking around buying retrenching internet content companies like AOL and Yahoo, but on the other hand, I give them credit for not overpaying or chasing “hot” content companies of today. Frankly, I’d expect to see Verizon write down their AOL and Yahoo purchases entirely and/or spin them off and/or sell them for whatever they can get in the next two to three years. But clearly I think there is so much more potential upside from the company’s core competence of delivering connectivity to people, businesses and devices that I want to start a position in this stock today.
Verizon pays us a 5% dividend yield to just hold the stock and I think, frankly, the stock could double or more in the next three to five years if they really do end up dominating 5G in the US as I expect they will. If the company doesn’t dominate 5G in the US and/or in a broader stock market decline, the stock could drop below $40, I suppose. So there’s your risk/reward profile for this name.
Don’t forget that I will be live streaming The Great Tech Bubble Is Back, but It Ain’t Over Yet, my talk at the Money Show this afternoon at 1:30pm CT on The IAm Cody Willard App. Be sure to tune in.
