The communications sector is comprised of a broad range of companies that sell phone and Internet services via traditional landline, broadband, or wireless. The sector also includes companies that are major creators and producers of movies, television shows, and other content. Well-known companies in the communications sector include Facebook Inc. (FB), Comcast Corp. (CMCSA), and T-Mobile U.S. Inc. (TMUS). The COVID-19 pandemic has sharply boosted user activity for many entertainment and streaming services, while also causing plunging advertising at some companies.
Communications stocks, represented by the Communications Select Sector SPDR ETF (XLC), have underperformed the broader market. XLC has provided a total return of 18.6% over the past 12 months, below the Russell 1000’s total return of 20.8%, as of January 13, 2020. All statistics in the tables below are as of January 13.
Here are the top 3 communications stocks with the best value, the fastest growth, and the most momentum.
Best Value Communications Stocks
These are the communications stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
| Best Value Communications Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing P/E Ratio | |
| Lumen Technologies Inc. (LUMN) | 10.79 | 11.8 | 9.1 |
| Nexstar Media Group Inc. (NXST) | 110.81 | 4.9 | 9.3 |
| Telephone and Data Systems Inc. (TDS) | 18.98 | 2.2 | 9.9 |
Source: YCharts
- Lumen Technologies Inc.: Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers various communications services, including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more. On November 4, the company reported financial results for Q3 2020, which ended September 30, 2020. Net income rose 21.2% despite a 3.4% decline in revenue. Net income was boosted by factors including lower costs of services and products, depreciation and amortization charges, and interest expenses compared to the year-ago quarter.
- Nexstar Media Group Inc.: Nexstar Media Group is a television broadcast and digital media company. It is focused on the acquisition, development, and operation of television stations, interactive community websites, and digital media services in medium-sized markets throughout the U.S. The company announced in mid-December that Nexstar Inc., one of its wholly-owned subsidiaries, had agreed to acquire BestReviews Inc. from Tribune Publishing Co. (TPCO) for $160 million. BestReviews is a consumer product recommendations company.
- Telephone and Data Systems Inc.: Telephone and Data Systems is a diversified telecommunications company that operates in the cellular, local telephone, and personal communications areas. The company provides services throughout the U.S.
Fastest Growing Communications Stocks
These are the communications stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
| Fastest Growing Communications Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | |
| Zoom Video Communications Inc. (ZM) | 364.63 | 104.3 | 6,500 |
| IAC/InterActiveCorp. (IAC) | 196.58 | 16.8 | 1,160 |
| World Wrestling Entertainment Inc. (WWE) | 50.18 | 3.9 | 850.0 |
Source: YCharts
- Zoom Video Communications Inc.: Zoom Video Communications is a provider of video-first communication platform and Web conferencing services. It offers cloud-based HD video conferencing, mobility, and Web meetings.
- IAC/InterActiveCorp.: IAC/InterActiveCorp (Dotdash, including Investopedia.com, is a wholly-owned business of IAC/InteractiveCorp) is a media holding company that, through its subsidiaries, provides media and Internet services. Its business segments include ANGI Homeservices, Vimeo, Search, Emerging & Other, and Dotdash, the latter of which operates a portfolio of digital brands, including Investopedia. IAC announced in late December that its board of directors has approved a plan to spin off the company’s full stake in Vimeo, a video software company. Upon completion of the spinoff, Vimeo will become an independent, separately-traded public company. The spinoff is expected to occur during Q2 2021.
- World Wrestling Entertainment Inc.: World Wrestling Entertainment operates as a media and entertainment company. It offers live wrestling events, television programming, advertising, licensing, and more.
Communications Stocks with the Most Momentum
These are the communications stocks that had the highest total return over the last 12 months.
| Communications Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Zoom Video Communications Inc. (ZM) | 364.63 | 104.3 | 392.5 |
| Pinterest Inc. (PINS) | 72.76 | 45.0 | 270.8 |
| Zillow Group Inc. (ZG) | 149.88 | 34.9 | 223.8 |
| Russell 1000 | N/A | N/A | 20.8 |
| Communications Select Sector SPDR ETF (XLC) | N/A | N/A | 18.6 |
Source: YCharts
- Zoom Video Communications Inc.: See above for company description.
- Pinterest Inc.: Pinterest operates a social networking site that allows users to share photos, as well as small-scale animated GIFs and videos in a pinboard-style format.
- Zillow Group Inc.: Zillow is an online real estate database company. It provides information about homes, real estate listings, and mortgages through its website and mobile applications. On November 5, the company reported financial results for Q3 2020, which ended September 30, 2020. Zillow posted net income of $39.6 million in net income compared to a net loss of $64.6 million in the year-ago quarter. Revenue, however, fell 11.9%.
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