The company’s profitability rose in all segments and at levels not seen since 2006. Ericsson is the first company to launch live commercial 5G networks on four continents. On its conference call, CEO Ekholm said that the company expects momentum from its North American market continuing into 2021. My Best 5G Stocks to Buy Right Now Ericsson and these two other 5G players are well-poised to profit from the growth of this nascent market. Overall, short-term performance may suffer as sales volume comes in lower than expected. To be sure, that case rests on Ericsson taking solid share in 5G from Nokia and Huawei. Despite the lack of interest — or perhaps because of it — ERIC stock might have the most appealing case for 5G bulls. It’s Ericsson that might have the most attractive case in 5G, and if the company delivers on its promise, Ericsson won’t seem undercovered for too much longer. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Shares have dropped 13% over the past decade, while the NASDAQ Composite has more than quadrupled. Ericsson Stock Jumps as 5G Success in China Boosts Earnings. TDC switches to Ericsson 5G. 1125 N. Charles St, Baltimore, MD 21201. Investors are overlooking its strength, which suggests the stock is worth more than the fair value calculated above. (The fact that the company already has pulled down 2020 guidance, however, impacts that company’s credibility.) 1125 N. Charles St, Baltimore, MD 21201. 7 Best 5G Stocks for the Communication Revolution | Kiplinger Liani says Ericsson is gaining 5G market share in critical geographical markets, such as the U.S., China, Australia and Germany. Today, 70 percent of the top service providers evaluated in global public 4G network tests use Ericsson’s radios … They believe it will be a key contributor to its earnings. The news there admittedly remains somewhat mixed. There are reasons for caution. Still, it will have a positive impact on its business model. If margins expand and sales grow, that multiple either has to dip into the single-digits or, as would be more likely, ERIC stock has to rally. China’s Huawei has been the subject of media coverage and political uncertainty. Ericsson (ERIC - Free Report) has completed the acquisition of Cradlepoint, the market leader in Wireless Edge WAN solutions. At least some of what 5G deployments Ericsson has won have come through lower upfront pricing, as Bloomberg has reported. Why Ericsson Stock Might Be the Best 5G Play, 8 Next Energy Solutions as We Pass Peak Oil, Fisker Stock Has the Potential for Big Future Gains, Louis Navellier and the InvestorPlace Research Staff, What Did the Stock Market Do? Apple stock is back on the IBD Leaderboard watch list. Meanwhile, Nokia has a turnaround strategy of its own, and a reasonable valuation if its own targets are hit. This simply looks like it should be a better company going forward. But Xilinx is also a great 5G stock to buy because of its financials. If 5G can accelerate that top-line growth, Ericsson’s fundamentals can become attractive in a hurry. A multi-year turnaround offers scope for improvement and already has borne fruit. On December 17, Louis Navellier & Matt McCall will reveal the major events that will rock the markets in 2021. Indeed, Ericsson has emerged as one of the leading 5G network equipment … Published: September 25, 2020. So this is a bit of a “this time is different” case, which always is risky. In addition, the … 1125 N. Charles St, Baltimore, MD 21201. Ericsson has simplified its operating structure and taken out roughly $1 billion in costs, while reinvesting some of those savings in much-needed research and development. Nokia (NYSE:NOK) has drawn the attention of value investors. All rights reserved. And even though its customers like to maintain vendor diversity, Ericsson offers lower operating expenses and ultimately lower total cost of ownership for its solutions. Excluding $1 per share in net cash on the balance sheet, ERIC is trading at less than 15x free cash flow based on 2019 numbers. Given Ericsson’s leadership in 5G technology and the strong growth potential for 5G operations in North America, we believe that the company’s stock is undervalued and estimate Ericsson… Yet Huawei, along with Nokia, still scored a big win with Telefonica Deutschland (OTCMKTS:TELDF). Dec. 11, 2020, A Tidal Wave of Cash Is About to Hit the Markets, Top SPAC Merger News This Week: Canoo, XL Fleet, Microvast and 10 More Hot SPACs, 8 Battery Stocks That Electric Vehicle Companies Rely On, The 10 Most Reliable Value Stocks to Buy for 2021, 7 Cheap Stocks to Buy Before the Market Realizes their Worth. At its modest valuation on a P/E basis, the stock is attractive for value investors seeking a 5G investment. Gross margin dipped below 30% in the last three quarters of 2017. All rights reserved. Last month, Brasilia declared support for the Clean Network, a U.S. initiative to get countries on board in preventing the growth of Chinese technology in 5G networks worldwide. Jing Pan, B.Sc, MA … In December, the company agreed to over $1 billion in fines payable to the U.S. Department of Justice and the U.S. Securities and Exchange Commission. The news there admittedly remains somewhat mixed. Millions of People Will Be Blindsided in 2021. Despite U.S. pressure, Huawei still is driving sales in Western countries. Ericsson has seen revenues decline from about $29 billion in 2015 to about $24 billion in 2018, on account of lower 4G deployments and also due to a weaker Swedish krona. Nokia’s credibility seems too damaged. 2020 InvestorPlace Media, LLC. Copyright © See the List of Top 10 5G … Its gross margin rose to 43.1%, up from 37.7% Y/Y. It's a curated list of leading stocks that stand out on technical and fundamental metrics. By the company’s own admission, Ericsson’s culture turned toxic in the past. The 5G consumer market could be worth USD 31 trillion by 2030 globally, according to the new Harnessing the 5G Consumer Potential report from Ericsson (NASDAQ: ERIC) ConsumerLab. Dec. 11, 2020, A Tidal Wave of Cash Is About to Hit the Markets, Top SPAC Merger News This Week: Canoo, XL Fleet, Microvast and 10 More Hot SPACs, 8 Battery Stocks That Electric Vehicle Companies Rely On, The 10 Most Reliable Value Stocks to Buy for 2021, 7 Cheap Stocks to Buy Before the Market Realizes their Worth. This suggests that Ericsson’s stock will continue its uptrend that began in March. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Nasdaq Sales from the Networks division increased by 6% Y/Y. The news there admittedly remains somewhat mixed. Its revenue between 2018 and 2019 was $3 billion with a net profit of $890 million. Ericsson's (NASDAQ:ERIC) stock is a favorable long-term investment. On December 17, Louis Navellier & Matt McCall will reveal the major events that will rock the markets in 2021. Increasing R&D investments will accelerate its growing portfolio of products. Excluding the U.S. fines, 2019 free cash flow neared $1.8 billion, or about 54 cents per share. Will your money be safe? Investors could buy shares of Ericsson and pay a price-to-earnings of no more than 25 times. Embracing Open RAN (O-RAN) positions the company for future software revenue growth. That expansion helped drive a strong improvement in operating profit, which excluding one-time costs (including the U.S. fines) more than doubled last year. Nokia remains a formidable competitor. Ericsson stock has been an awful multi-year investment. Article printed from InvestorPlace Media, https://investorplace.com/2020/02/ericsson-stock-best-5g-play/. One pillar of the case for Ericsson stock is that the company qualitatively has plenty of room for improvement. CEO Ekholm does not expect O-RAN will contribute to the bottom line in the 2021-22 timeframe. The continued market share growth is a positive catalyst that will support its revenue growth. Millions of People Will Be Blindsided in 2021. By comparison, Apple stock trades at a P/E approaching 40 times and a forward P/E of around 30 times. All rights reserved. It’s possible the pressure on Huawei could be eased through a broader U.S.-China trade deal or a new presidential administration in 2021. Fortunately, Covid-19 did not harm its business. China ’ s own admission, Ericsson stock has a sneakily attractive case its strength by leveraging in. Faster than the company for future software revenue growth s profitability rose all! 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