2 Under-the-Radar 5G Stocks That Should Continue to Outperform in 2022
The need for 5G solutions is expected to increase rapidly owing to an extended hybrid work culture and favorable government policies. Therefore, we think it could be wise to scoop...
The need for 5G solutions is expected to increase rapidly owing to an extended hybrid work culture and favorable government policies. Therefore, we think it could be wise to scoop up shares of under-the-radar 5G stocks Keysight Technologies (KEYS) and MACOM Technology (MTSI). Let’s discuss.
5G solutions have become crucial for everyday life, especially with the continuing COVID-19 pandemic. AsCOVID-19 omicron-variant-led cases surge, the 5G industry is expected to expand further. According to Statista, 5G subscriptions will likely reach 3 billion by 2025.
The industry is further expected to thrive thanks to favorable government policies. President Biden’s infrastructure bill includes $65 billion to improve broadband internet access in rural areas.
Against this backdrop, we think it could be wise to bet on fundamentally sound 5G stocks Keysight Technologies, Inc. (KEYS) and MACOM Technology Solutions Holdings, Inc. (MTSI). They may not be making headlines every day but they have solid growth prospects.
Keysight Technologies, Inc. (KEYS)
KEYS provides electronic design and test solutions to commercial communications, networking, aerospace, defense, government, automotive, and education industries. The Santa Rosa, Calif.-based company operates through two segments: Communications Solutions Group and Electronic Industrial Solutions Group.
On December 15, 2021, KEYS introduced the Radar Scene Emulator, which enables automakers to lab test complex, real-world driving scenarios, accelerating the overall speed of the test. Thomas Goetzl, vice president and general manager for KEYS’ Automotive & Energy Solutions business unit, said, "Keysight's Radar Scene Emulator offers automotive OEMs a breakthrough solution that will bring the road to the lab through full scene rendering. The vision of fully autonomous vehicles is rapidly approaching, and we're thrilled to be accelerating this vision into a reality."
KEYS’ orders increased 21.1% year-over-year to $1.49 billion for its fiscal fourth quarter, ended October 31, 2021. Its revenue came in at $1.29 billion, up 6.1% year-over-year, while its net income increased 30% to $282 million. Also, its non-GAAP income from operations was $397 million, up 10.9% year-over-year.
Analysts expect KEYS’ revenue to increase 6.5% year-over-year to $5.26 billion in its fiscal 2022. Its EPS is expected to increase 10.6% year-over-year to $6.89 in the current year. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 35.6% in price to close yesterday’s trading session at $207.93.
KEYS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
KEYS has an A grade for Quality and a B grade for Stability. Within the Technology - Electronics industry, it is ranked #15 of 45 stocks. Click here to see KEYS’ ratings for Growth, Value, Momentum, and Sentiment as well.
MACOM Technology Solutions Holdings, Inc. (MTSI)
MTSI in Lowell, Mass., together with its subsidiaries, designs and manufactures analog semiconductor solutions for use in wireless and wireline applications across the radio frequency (RF), microwave, millimeter-wave, and lightwave spectrum. It offers a portfolio of standard and custom devices, including integrated circuits and multi-chip modules.
For the fiscal fourth quarter, ended October 1, 2021, MTSI’s revenue increased 5.4% year-over-year to $155.21 million. The company’s net income came in at $17.13 million, up 14.2% sequentially. Also, its EPS came in at $0.24, up 9.1% year-over-year.
MTSI’s revenue is expected to be $666.87 million in its fiscal 2022, representing a 9.9% year-over-year rise. Furthermore, its EPS is expected to grow 21.9% year-over-year in the current year to $2.62. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 29% in price to close yesterday’s session at $79.94.
It is no surprise that MTSI has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Momentum and a B grade for Growth, Stability, and Quality.
KEYS shares were trading at $207.34 per share on Wednesday morning, up $0.45 (+0.22%). Year-to-date, KEYS has gained 56.97%, versus a 29.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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