In case you haven’t noticed, Nasdaq stocks are on fire.
In fact, they have not performed this well in over two decades . . . since the dot-com era of the late 1990s, to be exact.
So far this year the Nasdaq 100 Index of leading tech stocks is up a whopping 22%. That compares to a loss of 1.7% for the S&P 500 Index in 2020. And select tech stocks could hand you 562% gains in 2020.
In other words, as you can plainly see in the chart above, tech stocks are leaving everything else in the dust.
What’s driving this superior performance for technology stocks is several big-picture trends:
- Cloud computing,
- The internet of things,
- And above all, the 5G technology revolution.
The 5G era will usher in a transformation in how we communicate and gather information. 5G technology will deliver higher internet speeds and more reliable connections.
This will take the internet to a whole new level. 5G technology will better enable all the other fast-growing technology trends. It will make cloud computing fast as lightening. It will make the internet of things a reality in your own home.
There are plenty of companies on the cutting-edge of 5G technology today. Some of these 5G stocks will become the next Microsoft (MSFT) or the Amazon.com (AMZN) of 5G technology. But some won’t make it.
After all, technology is a highly competitive business. There’s only one Microsoft.
That’s why for my favorite 5G investments, I’m looking for low-risk but high-reward stocks to invest in. And there’s one type of stock that checks all the boxes for me.
- · These stocks are riding the 5G technology wave
- · There are only a handful of companies with this
technology. And that means little competition.
- · These stocks operate an exclusive kind of
toll-road that 5G will ride on.
I’m talking about the leading cellular tower companies. You see, 5G is the next generation of cellular communications. 5G signals get beamed across America from these towers, controlled by just a few companies.
The biggest players in the business are:
- American Tower (AMT)
- Crown Castle (CCI)
- SBA Communications (SBAC).
Tower companies own the key real estate, the toll road over which 5G travels. 5G signals don’t travel as far as older cellular signals. That means more 5G technology equipment. More transmitters, more antenna.
So the 5G rollout means huge investments in new equipment, and there’s only one place to put it all: towers owned by the big three. The beauty is this is a very high-profit-margin business.
After all, the towers are already there. They’ve been relaying information since the dawn of cellular.
All you have to do is install more antennas. And the installation is paid for by the big telecom companies in the fees they pay to use the towers.
These are highly profitable, cash-rich companies. These 5G technology stocks are also a conservative, low-risk way to play 5G because they are quasi monopolies.
The demand for more and faster internet is accelerating at an explosive rate. That’s why I’m excited about the prospects for a few select companies developing 5G technology.
And one of the best ways to play this red-hot trend is with the good old-fashioned tower stocks.