Top communications stocks for this month include Opera Ltd., Tencent Music Entertainment Group, and Perion Network Ltd., prices of which have climbed by as much as 88% in the last year even as the broader sector has fallen.
Communications stocks, represented by a benchmark exchange-traded fund (ETF)—the Communication Services Select Sector SPDR ETF (XLC)—have provided a total return of -19% over the past 12 months while the benchmark Russell 1000 Index has lost over a tenth of its value. These market performance figures are as of April 3 and all statistics in the tables below are as of March 30.
Here are the top three communications stocks each 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 that you’re paying less for each dollar of profit generated.
| Best Value Communications Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| Sinclair Broadcast Group Inc. (SBGI) | 16.38 | 1.1 | 0.4 |
| Gray Television Inc. (GTN) | 8.57 | 0.8 | 2.0 |
| DISH Network Corp. (DISH) | 9.0 | 4.8 | 2.5 |
Source: YCharts
- Sinclair Broadcast Group Inc.: Sinclair is a diversified media company that owns, operates, and provides services to 185 television stations in 86 markets across the U.S., delivering content through digital platforms, multichannel video program distributors, and other avenues. On March 4, the company announced a reorganization, after which the publicly-traded parent of Sinclair Broadcast will be known as Sinclair Inc.
- Gray Television Inc.: Gray is a television broadcasting company that operates stations in over 100 markets across the southern, midwestern, and southwestern regions of the U.S.
- DISH Network Corp.: DISH is a holding company that, through subsidiaries, provides retail wireless and pay-TV services. The company also offers direct broadcast satellites, fixed-satellite service products, and video programming services.
Fastest Growing Communications Stocks
These are the top communications stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
| Fastest Growing Communications Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Dave & Buster’s Entertainment Inc. (PLAY) | 36.53 | 1.8 | 53.8 | 64.3 |
| Live Nation Entertainment Inc. (LYV) | 69.20 | 16.0 | N/A (see company description) | 58.7 |
| Take-Two Interactive Software Inc. (TTWO) | 116.59 | 19.7 | N/A (see company description) | 55.9 |
Source: YCharts
- Dave & Buster’s Entertainment Inc.: Dave & Buster’s is a restaurant and entertainment company. It provides food and beverages as well as entertainment attractions including arcade and skill-based games. In June 2022, Dave & Buster’s completed its acquisition of Main Event, which operates 50 family-oriented entertainment centers across 17 states. The company’s revenue growth is partially attributable to this acquisition. Still, comparable store sales in the most recent quarter climbed by about 19%, reflecting core growth.
- Live Nation Entertainment Inc.: Live Nation produces live concerts around the world. It also sells tickets and provides ticketing services for concerts and sporting events through its Ticketmaster unit. Nearly 59% growth in revenue for the final quarter of 2022 was driven largely by increased concert revenue, supported by improvement in ticketing and advertising. Live Nation does not have an EPS growth figure in the table above because EPS was negative for the period in question.
- Take-Two Interactive Software Inc.: Take-Two develops and sells interactive games for console systems, computers, and mobile devices. Its brands include Rockstar Games, Zynga, and Private Division, among others. Total revenue for the last three months of 2022 surged by almost 56%, on strong growth in both its gaming and advertising business. Take-Two swung to a $153 million net loss for the quarter compared with $145 million in net income the year before. Its cost of revenue and operating costs more than doubled over the year, with almost $300 million of new costs arising from the amortization of assets acquired as part of the company’s $12.7 billion acquisition of Zynga in May.
Communications Stocks With the Most Momentum
These are the communications stocks that had the highest total return over the past 12 months.
| Communications Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Opera Ltd. (OPRA) | 10.9 | 0.9 | 87.6 |
| Tencent Music Entertainment Group (TME) | 8.48 | 14.4 | 70.3 |
| Perion Network Ltd. (PERI) | 38.36 | 1.8 | 67.7 |
| Russell 1000 Index | N/A | N/A | -11.0 |
| The Communication Services Select Sector SPDR ETF (XLC) | N/A | N/A | -18.6 |
Source: YCharts
- Opera Ltd.: Opera is a web application developer. It designs and builds web browsers for mobile phones and PCs. In March 2023, the company announced that it had launched browsers with new AI tools, including integration of the popular ChatGPT system.
- Tencent Music Entertainment Group: Tencent Music is a Chinese online music entertainment company. It operates a platform featuring online music, streaming, and recording services.
- Perion Network Ltd.: Perion is an Israeli digital media company. It offers photo sharing and email products and services globally. Perion’s net income more than doubled year-over-year for the final quarter of 2022, with strong growth in video and connected TV advertising revenue.
Advantages of Investing in Communication Stocks
Essential Services: Communication services play a critical role in people’s day-to-day lives and help shape the digital economy. Companies in this sector provide the infrastructure, products, and services that businesses and consumers require to connect to an increasingly digital world. COVID-19 accelerated the transition to virtual or remote experiences, a trend that consumers have embraced and is likely to keep demand for innovative communication solutions strong.
Infrastructure Spending: As part of the $1.2 billion infrastructure bill passed by lawmakers in 2021, $65 billion has been allocated toward expanding broadband access and 5G connectivity nationwide. National spending on communication infrastructure benefits companies that build, service, and lease such equipment. For example, cell tower operators, such as American Tower Corporation (AMT), Crown Castle Inc. (CCI), and SBA Communications Corporation (SBAC), stand to benefit from the expanding telecommunications rollout.
Risks of Investing in Communication Stocks
Antitrust Legislation: Leading big tech communication stocks, such as Meta Platforms, Inc. (META) and Alphabet Inc. (GOOGL), face potential challenges from antitrust legislation that could weaken their grip on digital communication. The proposed American Innovation and Choice Act, which has bipartisan support in the House and Senate, would lay down laws prohibiting advantages these companies have in marketing their products and make it easier for competitors to communicate with customers and collect information about their users. The legislation, if passed through Congress, would lead to a significant shift in how communication services are offered in the United States and create heightened volatility in the sector.
Component Shortage: Communication companies heavily rely on particular materials and components to build their products and infrastructure. The recent global chip shortage caused by pandemic-induced supply chain disruptions, labor issues, and unprecedented demand led to a scarcity of semiconductors, which in turn hobbled the communications sector. Future shortages of similar products or the materials used to create them could create similar bottlenecks in production.
