Updated: Jul 1, 2024, 3:01pm
Communication stocks are shares of companies that provide wired, wireless, satellite, cable and other coms infrastructure to businesses and consumers. When you invest in communications companies, you buy shares of their future cash flows—and help develop the new technologies we all depend on.
To help you pick the best stocks to invest in, Forbes Advisor has compiled a list of the biggest companies in the communications services sector by market capitalization.
- Best Communications Services Stocks of August 2024
- Alphabet Inc. (GOOGL)
- Meta Platforms, Inc. (META)
- Netflix, Inc. (NFLX)
- T-Mobile US, Inc. (TMUS)
- The Walt Disney Company (DIS)
- Verizon Communications Inc. (VZ)
- Comcast Corporation (CMCSA)
- AT&T Inc. (T)
- NetEase, Inc. (NTES)
- América Móvil, S.A.B. de C.V. (AMX)
- Types of Communications Stocks
- Advantages of Investing in Communications Stocks
- Risks of Investing in Communications Stocks
- How to Buy Communications Stocks
- Next Up in Investing
Best Communications Services Stocks of August 2024
Types of Communications Stocks
Every stock market sector can be broken down into industries and sub-sectors. According to the North American Industry Classification System, the communications sector is typically segmented into the following sub-sectors:
- Wired Telecommunications Carriers. These are companies that provide fiber optic and other hard-wired communications infrastructures that businesses or consumers can use.
- Wireless Telecommunications Carriers. These include cell phone providers and other companies that provide telecom services that do not require physical connectivity to a network (with the exception of Satellite connectivity).
- Telecommunications Resellers. These are companies that don’t have their own network infrastructure but rely on the network of another provider to serve their own customers.
- Satellite Telecommunications. Satellite communications companies provide satellite phone services or other communications services that rely on satellites.
- Cable and Other Program Distribution. These include fiber optic cable network owners and other providers.
In addition to these core types of communications companies, there are also some other types of telecommunications companies (NAICS 5179) that do not provide these common services. There are also communications holding companies, such as some of those included in our list, that offer a variety of services, including two or more of those described above.
Advantages of Investing in Communications Stocks
- Innovation. Along with tech stocks, communications companies are often some of the most innovative businesses available for public investment.
- High growth potential. Because these companies constantly invest in new technologies and innovation, they often offer significant opportunities for price appreciation.
- Global reach. Communication companies offer services that consumers use everyday, so advances in technology can improve standards of living around the globe.
- Reliable sales. Because communication companies are relied on by businesses and consumers everyday, significant drop-offs in sales or customer bases are rare.
Risks of Investing in Communications Stocks
- Elevated volatility. While communication stocks can offer significant upside, they can also lose money if large investments in innovation don’t pan out.
- Competition. Communications stocks often compete for users with similar services in the same areas. Disruption is a real threat for many communications stocks.
- Regulatory threats. Communications companies are regulated by the Federal Communications Commission (FCC), and their businesses can be heavily impacted by changes in consumer privacy laws and other regulations.
How to Buy Communications Stocks
Investors can purchase shares in communications stocks through a brokerage account or in an individual retirement account (IRA). In certain rare cases, investors can also purchase individual shares through employer-sponsored 401(k) plans.
If you’re a new investor or looking for a platform to trade through, be sure to check out our list of the best online brokers and the best investment apps.
It’s important to note that investing in individual stocks can be volatile, and for that reason they are usually considered riskier assets to own. When buying individual stocks, it’s critical for investors to research individual companies and assess their financial circumstances before investing.
Read More: How To Buy Stocks
Rather than buying individual stocks, many financial advisors recommend investors use investments like exchange-traded funds (ETFs) or index funds to diversify their holdings. If this is something you want to consider, you can view our list of best total stock market index funds to find the best options for you.
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