3 Communication Services Stocks to Buy as the Fed Turns Dovish
The Communication Services sector comprises companies that provide wired, wireless, satellite, cable, Internet media services, broadcasting and other coms infrastructure. The sector is marked by its strong fundamentals.
Communication Services has been one of the fastest-growing sectors in the economy. Understandably, one of the chief reasons for this growth has been the sector’s close link to tech, the singularly significant driver of the markets this year. At the end of September, The Communication Services Select Sector SPDR (XLC) had grown 37.7% year to date, the highest among all 11 broad sectors of the economy.
This sector has been growing in leaps and bounds despite various headwinds. For instance, the telecom sub-sector received a blow when The Wall Street Journal published a series of articles on the potential environmental liabilities of lead-sheathed cables.
Recession worries have many companies cutting back on advertising spending. Also, antitrust investigations, under the watchful eye of bipartisan regulators, could soon become a thing for the world's largest social and communications companies. Regardless, the communication services sector has bounced back from the slumber of 2022 and has continued to grow, driving the tech sector with it.
Sectors that have strong fundamentals usually come out of a downturn relatively unscathed by cutting costs and maintaining strong balance sheets. Also, recession talks are receding, and in such an environment, mega-cap growth stocks like tech and communication services seem lucrative as they currently seem undervalued. With recent Fed minutes fueling conjecture that the Fed might not raise interest rates in the foreseeable future, the outlook might seem even rosier for the sector.
Thus, we have selected three stocks that we believe would be gaining ground in the ensuing months and should be looked into now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Ooma, Inc. OOMA is a provider of communications services and related technologies operating in the United States and Canada.
OOMA’s expected earnings growth rate for the current year is 13%. The Zacks Consensus Estimate for its current-year earnings has improved 1.7% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of B.
Live Nation Entertainment, Inc. LYV is a live entertainment company that operates through concerts, ticketing, sponsorship and Advertising segments.
LYV’s expected earnings growth rate for the current year is 59.4%. The Zacks Consensus Estimate for its current-year earnings has improved 1% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Telefonica Brasil S.A. VIV is a mobile telecommunications company from Brazil. Its services include local, domestic, long-distance and international calls, and its mobile portfolio comprises voice and broadband Internet access.
VIV’s expected earnings growth rate for the current year is 17%. The Zacks Consensus Estimate for its current-year earnings has improved 7.8% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
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Telefonica Brasil S.A. (VIV) : Free Stock Analysis Report
Live Nation Entertainment, Inc. (LYV) : Free Stock Analysis Report
Ooma, Inc. (OOMA) : Free Stock Analysis Report
