Communication services has always been a robust sector with strong fundamentals. This segment includes companies operating in advertising, broadcasting, entertainment and mobile telecom services, and Internet media services.
It has also been the blockbuster sector of 2023 alongside Technology, which it closely relates to. Till the end of July, The Communication Services Select Sector SPDR (XLC) had grown 44% year to date, the highest growth among all 11 broad sectors of the economy.
This sector has been growing in leaps and bounds despite various headwinds. For instance, recession worries have many companies cutting back on advertising spending. Also, some of the largest companies in the sector are falling under the watchful eye of bipartisan regulators. Antitrust investigations could soon become a thing for the world’s largest social and communications companies. Regardless, the communication services sector has bounced back from the slumber of 2022 and continued to grow.
With recent data fueling conjecture that the Fed might not raise interest rates from its September and November meetings, the outlook might seem even rosier for the sector. When recession talks recede, mega-cap growth stocks like tech and communication services seem lucrative as they currently seem undervalued. Also, because of having strong fundamentals, companies from the segment that will cut costs and maintain solid balance sheets may have the best long-term prospects to come out of a downturn in a stronger position.
Thus, we have selected four stocks that we believe would be gaining ground in the ensuing months and should be looked into now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
T-Mobile US, Inc. TMUS provides mobile communications services in the United States, Puerto Rico and the Virgin Islands.
TMUS’ expected earnings growth rate for the current year is 254.9%. The Zacks Consensus Estimate for its current-year earnings has improved 3.4% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of B.
Live Nation Entertainment, Inc. LYV is a live entertainment company that operates through concerts, ticketing, sponsorship and Advertising segments.
LYV’s expected earnings growth rate for the current year is 57.8%. The Zacks Consensus Estimate for its current-year earnings has improved 274.1% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A.
Telefonica Brasil S.A. VIV is a mobile telecommunications company from Brazil. Its services include local, domestic, long-distance, and international calls, and its mobile portfolio comprises voice and broadband Internet access.
VIV’s expected earnings growth rate for the current year is 8.5%. The Zacks Consensus Estimate for its current-year earnings has improved 4.1% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of B.
Telefonica Brasil S.A. (VIV): Free Stock Analysis Report
Live Nation Entertainment, Inc. (LYV): Free Stock Analysis Report
T-Mobile US, Inc. (TMUS): Free Stock Analysis Report
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