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 outperformed the broader market. XLC has provided a total return of 27.8% over the past 12 months, above the Russell 1000’s total return of 20.6%, as of December 16, 2020. All statistics in the tables below are as of December 17.
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|
|Market Cap ($B)||12-Month Trailing P/E Ratio|
|Lumen Technologies Inc. (LUMN)||10.35||11.4||8.7|
|Nexstar Media Group Inc. (NXST)||104.70||4.6||8.8|
|Telephone and Data Systems Inc. (TDS)||18.74||2.1||9.8|
- Lumen Technologies Inc.: Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers communications services, including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.
- 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. On December 18, Nexstar reported that its wholly-owned cable network WGN America had reached a multi-year agreement with streaming provider Hulu to be carried by the streaming service beginning January 19, 2021. Additionally, Nexstar’s ABC-affiliated television stations will be restored to the Hulu + Live TV service. Financial terms of the agreement were not disclosed. The deal will enable WGN America to add about 4 million new Hulu + Live TV subscribers to the cable network’s national reach. The network is now available to about 75 million U.S. households.
- 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. On November 17, the company declared a Q4 dividend of $0.17 per common share and Series A common share to be paid on December 30.
Fastest Growing Communications Stocks
These are the communications stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Communications Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Zoom Video Communications Inc. (ZM)||404.00||115.6||6,500|
|World Wrestling Entertainment Inc. (WWE)||45.53||3.5||850.0|
- Zoom Video Communications Inc.: Zoom Video Communications is a provider of video-first communication platform and Web conferencing services. It offers cloud-based HD video conferencing, mobility, and Web meetings. For Q3 FY 2021, ended October 31, Zoom reported a 366.5% YOY increase in revenue and net income nearly 90 times higher than one year prior. The gains were driven by a massive increase in customers, including nearly six times as many customers with more than 10 employees relative to Q3 FY 2020. The main driver was the COVID-19 pandemic.
- IAC/InterActiveCorp.: IAC/InterActiveCorp (Dotdash, including Investopedia.com, is a wholly-owned business of IAC/InteractiveCorp) is a media holding company that, through its subsidiaries, provides media and Internet services. Its business segments include ANGI Homeservices, Vimeo, Search, Emerging & Other, and Dotdash, the latter of which operates a portfolio of digital brands, including Investopedia.
- World Wrestling Entertainment Inc.: World Wrestling Entertainment operates as a media and entertainment company. It offers live wrestling events, television programming, advertising, licensing, and more. In November, the company announced the appointment of Karen Mullane as Controller & Chief Accounting Officer.
Communications Stocks with the Most Momentum
These are the communications stocks that had the highest total return over the last 12 months.
|Communications Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Zoom Video Communications Inc. (ZM)||404.00||115.6||508.9|
|Pinterest Inc. (PINS)||70.27||43.4||285.9|
|Twilio Inc. (TWLO)||350.88||56.3||255.0|
|Communications Select Sector SPDR ETF (XLC)||N/A||N/A||27.8|
- 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.
- Twilio Inc.: Twilio develops communications software and a cloud-based platform for web developers that enables developers to integrate phone calls, internet protocol voice communications, and text messages into web, mobile, and phone applications. In November, Twilio announced that it had completed its acquisition of Segment, a customer data platform, in a stock deal valued at about $3.2 billion.
YCharts. “Financial Data.” Accessed Dec. 19, 2020.
Nexstar Media Group, Inc. “Nexstar’s Cable Network, WGN America, Reaches First-Ever Carriage Agreement with Hulu.” Accessed Dec. 20, 2020.
Telephone and Data Systems Inc. “TDS announces fourth quarter 2020 dividend.” Accessed Dec. 21, 2020.
Zoom Video Communications Inc. “CORRECTION – Zoom Reports Results for Third Quarter Fiscal Year 2021.” Accessed Dec. 20, 2020.
World Wrestling Entertainment Inc. “WWE® Names Karen Mullane Controller & Chief Accounting Officer.” Accessed Dec. 20, 2020.
Twilio Inc. “Twilio Completes Acquisition of Segment, the Market-leading Customer Data Platform.” Accessed Dec. 20, 2020.