Consumer demand for telecom services has kept expanding since the onset of the COVID-19 pandemic. The sector is projected to achieve solid growth over the next few years, owing to the extended remote life culture.
Demand for increased bandwidth and the 5G rollout have driven the telecom services sector. In addition, President Biden’s infrastructure bill is expected to provide further impetus to building better telecom facilities. According to a Market Watch report, the Telecom Services Market is expected to grow at more than 5.4% per annum over the period 2020 - 2027.
So, we think it could be wise to add quality telecom services stocks Cogent Communications Holdings, Inc. (CCOI) and InterDigital, Inc. (IDCC) to one’s portfolio now. They are currently trading below their 52-week highs, and they have an overall B (Buy) rating in our proprietary POWR Ratings system.
Cogent Communications Holdings, Inc. (CCOI)
Washington, D.C.-based CCOI, through its subsidiaries, provides high-speed internet access, private network, and data center colocation space services in North America, Europe, Asia, South America, Australia, and Africa. The company operates some 54 data centers.
For the third quarter, ended Sept. 30, 2021, CCOI’s service revenue increased 4% year-over-year to $147.93 million. The company’s net income came in at $13.32 million, compared to a $4.96 million loss in the previous period. Its EPS was $0.28, compared to a $0.11 loss per share in the year-ago period.
CCOI’s revenue is expected to be $616.93 million in fiscal 2022, representing a 4.3% year-over-year rise. In addition, the company’s EPS is expected to increase 89.6% per annum for the next five years. Over the past year, the stock has gained 9.3% to close yesterday’s trading session at $65.57. It is currently trading 18.5% below its 52-week high of $80.50, which it hit on Nov. 16, 2021.
It is no surprise that CCOI has an overall B grade, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. Also, CCOI has a B grade for Growth, Stability, and Quality.
CCOI is ranked #3 of 18 stocks in the Telecom - Domestic industry. Click here to see the additional POWR Ratings for CCOI (Value, Momentum, and Sentiment).
InterDigital, Inc. (IDCC)
IDCC designs and develops technologies that enable and enhance wireless communications in the United States and internationally. It provides technology solutions for digital cellular and wireless products and networks. IDCC is headquartered in Wilmington, Del.
On Nov. 4, 2021, CEO Liren Chen said, “We believe we are well positioned for future growth and are prepared to ensure that the value of our patent portfolio is recognized by those who benefit from our innovations.”
IDCC’s total revenue increased 64% year-over-year to $143.50 million for the third quarter, ended Sept. 30, 2021. Its net income came in at $26.23 million, up 10.3% year-over-year, while its EPS came in at $0.83, up 9.2% year-over-year.
For the quarter ended March 2022, analysts expect IDCC’s revenue to increase 21.2% to $99.79 million. Its EPS is estimated to increase 233.3% to $0.6 for the same period. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. The stock is currently trading 19.8% below its 52-week high of $85.75, which it hit on June 8, 2021, to close yesterday’s trading session at $68.81.
IDCC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
It has an A grade for Growth and a B grade for Value and Sentiment. Within the Telecom - Domestic industry, it is ranked #1. Click here to see the additional POWR Ratings for Momentum, Quality, and Stability for IDCC.
CCOI shares were trading at $65.04 per share on Thursday afternoon, down $0.53 (-0.81%). Year-to-date, CCOI has declined -11.12%, versus a -7.32% 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.
2 Buy-Rated Telecom Services Stocks to Scoop Up on the Dip StockNews.com
