With the recent market crash, stocks in practically all sectors have tumbled. Wireless service providers looking to be top 5G TSX stocks are no exception.
Now, despite volatility in the market, there’s opportunity to make profits long term. Quality stocks have been dragged down with the market and are trading cheap relative to their underlying value.
Today, we’ll look at three 5G TSX stocks that are trading at a discount and offer solid growth prospects to investors.
Rogers Communications (TSX:RCI.B)(NYSE:RCI) is a household name to Canadian consumers. It’s one of the largest telecom companies in the country and serves customers across multiple provinces.
As of writing, Rogers is trading at $61.83 and yielding 3.23%. As you’ll see below, that yield is dwarfed by some of its 5G TSX stock competitors.
Today its avenues for revenue are more diverse with more complete infrastructure. So, the theory would dictate that with Rogers you have to trade away some of the yield to “pay” for the fact it’s a lot bigger than its competitors.
Rogers will be looking to take advantage of its elite infrastructure when 5G fully rolls out in Canada in order to continue being a market leader.
As of now, it’s unclear how the pause in the major sports world is effecting parts of Rogers’ business, but in the long- term view, sports are coming back at some point.
Shaw as a 5G TSX stock?
Shaw Communications (TSX:SJR.B)(NYSE:SJR) is a smaller telecom company looking to break the wireless service triopoly in Canada. While it mainly services customers in Western Canada, its Freedom Mobile brand has been picking up steam in Ontario as well.
Currently, it’s trading at $23.12 and yielding 5.15%. Even with the attractive yield, it sports the richest P/E ratio amongst Canadian telecom companies at 17.03.
It therefore seems the positive sentiments surrounding the future growth of Freedom Mobile and Shaw as a whole are being reflected in the price of this 5G TSX stock.
Shaw will need to also improve its infrastructure to compete on a broader scale when 5G is released in Canada. As of now, it doesn’t quite have the coverage that some of its major competitors possess.
As of writing, this 5G TSX stock is trading at $22.64 and yielding about 5.15%. Telus also trades at a P/E ratio of 15.61, one of the lowest marks in the sector.
So, it appears you can get the same yield that Shaw offers, but at a discount relative to earnings. While Shaw could potentially have higher growth in the future, Telus is already an established powerhouse in the space.
Plus, rather than focusing on sports and media like Rogers, Telus has recently been investing more in its Telus Health branch. With the current global pandemic, that decision could pay off in spades as Telus could be an innovator in a space with quickly growing demand.
All in all, Telus has the infrastructure and size to compete with Rogers and also offers the same yield and has a lower P/E ratio than Shaw.
5G TSX stock strategy
Whichever way you look at it, opportunities abound to pick up cheap 5G TSX stocks. Based on the value propositions and current positioning of these three stocks, Telus looks like a solid pick when compared to Rogers and Shaw.
If you’re looking to make a long-term play on the release of 5G networks, consider adding one of these stocks to your portfolio.