2020 will see the widespread rollout of 5G networks around the globe, with many major phone makers gearing up to launch their next generation of handsets at some point this year. With the promise of download speeds up to 100 times faster than the current generation, 5G opens the door for a whole new world of possibilities across the spectrum of industry and business. From driverless cars to the Internet of Things (IoT), the next generation of wireless communication looks set to be the most disruptive force since the advent of the internet over 25 years ago.
This new wave of wireless technology will have far-reaching implications on pretty much every industry, business, and consumer around the world, but the work of actually designing, building, and implementing the necessary technology and infrastructure is no mean feat. While all the usual suspects, like Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Samsung (OTC:SSNLF), and many other big hitters are all hard at work preparing for 5G, there are countless smaller companies playing a key role in the 5G revolution. Let’s take a look at three with massive potential in the 5G connected future.
Inseego is one of the most pioneering firms in the development of 5G. The California-based company is focused on developing intelligent IoT device-to-cloud solutions that enable high-performance mobile applications for large enterprise verticals, service providers, and small-to-medium businesses around the globe. Inseego has partnered itself with one of the most critical firms to 5G, Qualcomm (NASDAQ:QCOM), which manufacturers the Snapdragon processor, the chip used in the vast majority of Android and iOS mobile devices.
Leveraging Qualcomm’s Snapdragon X55 5G modem, Inseego unveiled its next-gen 5G products at the flagship Consumer Electronics Show in Las Vegas last month. Some of the products showcased by Inseego at CES 2020 include the Connected Car, a collaboration with Veoneer, Ericsson (NASDAQ:ERIC), and Verizon (NYSE:VZ) for a range of new driver supports, collaborative driving, and self-driving solutions enabled by Inseego 5G products. The company also showcased its Augmented Reality-enabled Smart Glasses, manufactured by Vuzix and enabled by Inseego’s technology.
INSG stock has been on an impressive bull run in recent months as 5G moves closer to reality. Up over 110% since last August, Inseego is in pole position to capitalize on the booming IoT industry, which surpassed US$100 billion in revenue for the first time in 2017 and is expected to soar to $1.6 trillion by 2025.
Cohu Inc (NASDAQ:COHU)
Cohu also benefits from a boom in Qualcomm’s business in that it designs and manufactures semiconductor testing equipment for major chipmakers around the world. COHU stock is up a massive 80% in the last six months as the demand for 5G-enabled phones continues to grow, and this is playing out nicely in its most recent earnings report. For the last quarter, net loss shrank from $1.40 per share to $0.42 per share, despite net sales falling 16% to US$142 million.
In 2018, the company acquired Xcerra for a combination of cash and stock worth around US$627 million, which is pretty impressive considering combined sales for the two firms for that year were in excess of US$800 million. The acquisition increases Cohu’s addressable market to approximately US$5 billion, which further strengthens its ability to fully capitalize on the growth opportunities in the automotive, IoT, industrial, and mobility markets.
Casa Systems Inc (NASDAQ:CASA)
With a market cap of US$335 million, Casa is a relatively small cog in the 5G boom, but a very important one. The company manufactures cable, modem, optical, and WiFi networking products, and offers solutions for both fixed and mobile service providers. Casa is at the frontline of developing high-end 5G broadband access and has been working with Sprint (NYSE:S) since last October to design small cell systems, which facilitate the low bandwidth usage pivotal to the development of 5G, and the approval of the T-Mobile-Sprint merger will give Casa access to a much larger market.
The three firms mentioned above are just a tiny portion of the almost countless selection of 5G stocks to choose from—have any others caught your attention?
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