The Best Way to Play Trump’s Huawei Ban (And It’s under $10 a Share)
President Trump has pushed forward with a ban on Huawei Technologies Co. Ltd. and many investors are concerned that’s going to negatively impact the rollout of critically needed 5G technology.
In fact, I see a silver lining and it’s one that could yield huge profits for savvy investors.
This is the best 5G stock to buy right now – and it’s under $10.
5G is the next generation network that will make self-driving cars a reality, enable incredibly precise robotic surgery, and absolutely reinvent the Internet of Things (IoT) and more.
It’s a smarter, more immersive future. It’s also, according to some, now at risk because of the President’s ban on Chinese telecom colossus Huawei Technologies, Co.
The thinking is that “Huawei” is a critical, low cost, provider and that, by implication, cutting it out of U.S. networks will slow down 5G development.
In fact, the opposite is going to happen.
Banning Huawei equipment creates a silver lining because excluding the company from one of the world’s fastest growing markets – ours – will create a void that’s rapidly filled by other companies keen to compete.
Innovation always does.
Michael Dell, for example, started the computer company bearing his name, Dell Technologies Inc. (NYSE:DELL), with $1,000 in his dorm room the week before finals at the University of Texas. He’s now worth $21 billion because his “side-hustle” enabled him to fill the void for affordable computers with extra memory and higher performance left by IBM which was stuck in its ways at the time.
Frederick Smith wrote a term paper at Yale University in 1965 outlining the void he saw for time-sensitive shipments of medicine, legal paperwork, computer parts and electronics by traditional shippers using passenger routes to move goods. Today FedEx Corp. (NYSE:FDX) is a $45.86 billion company operating in 220 countries moving 6 million packages a day.
The late Steve Jobs started Apple Inc. (NasdaqGS:AAPL) in his garage with partner Steve Wozniak using $1,350 they’d raised by selling Jobs’ VW microbus and Wozniak’s HP calculator. They wanted to create a “computer for the rest of us” by filling the void inadvertently left by traditional engineers who thought of computers as dry, computational tools. Today Apple is worth $878.58 billion.
But you know me.
Picking up the slack isn’t good enough.
What I want to find is the one company poised to leap ahead.
I am particularly focused on Telefonaktiebolaget LM Ericsson (NasdaqGS:ERIC), a Swedish multinational networking and telecommunications company you probably know simply as “Ericsson.”
It’s front and center in the 5G revolution and poised for some really superb gains in the months ahead for five reasons:
First, Ericsson isn’t working alone. In fact, Ericsson has partnered with tech-savvy Icelandic provider, Siminn, to move forward with 5G. That will accelerate the move onto an expansion into Ericsson’s new 5G New Radio and Spectrum Sharing.
Second, Ericsson is a great way to play the broader tech that will grow around 5G. It’s working, for example, on something called “edge” computing. Most folks have never heard of this but edge computing is a new form of distributed storage that will bring data closer to where it’s needed instead of being sprawled across the Internet. Edge Gravity operates like a startup within Ericsson which is a similar arrangement to Google’s DeepMind or Amazon’s Lex.
Third, four analysts have upgraded the stock since July 2018 and, since then, there have been no analyst downgrades over the same time period. That’s particularly telling because analysts are usually more concerned with being right as opposed to being profitable. This tells me that a big move is all but baked into the proverbial cake.
Fourth, Ericsson has received 13 upwards EPS revisions over the past 30 days with no downward revisions. That, too, is important because current year EPS is estimated to grow year-over-year by an incredible 272.2% even as the five-year growth figure now stands at 56.70% per year.
And, fifth, Ericsson is trading under $10 a share right now. That means you’ve got a small stock with huge upside 5G potential that isn’t going to cost you an arm and a leg to buy.
In closing, the Huawei situation is not the “deal-breaker” many people think it is when it comes to 5G. But, rather, a fabulous opportunity.
Especially with a company like Ericsson!