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 sector include Facebook Inc. (FB), Alphabet Inc. (GOOGL), and T-Mobile U.S. Inc. (TMUS).
The coronavirus pandemic has sharply boosted business for many entertainment and streaming services, while also causing plunging advertising at other companies. Communications stocks, as represented by the Communication Services Select Sector SPDR ETF (XLC), have outperformed the broader market, providing investors with a total return of 11.2% compared to the S&P 500's total return of 5.1% over the past 12 months. These market performance numbers and the statistics in the tables below are as of May 22.
Here are the top 3 communications stocks with the best value, the fastest earnings 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|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|ViacomCBS Inc. (VIAC)||19.84||12.2||4.5|
|Discovery Inc. (DISCA)||20.67||10.5||7.1|
|Omnicom Group Inc. (OMC)||51.86||11.1||8.5|
- ViacomCBS Inc.: ViacomCBS is a global multimedia company focused on creating premium content and experiences for audiences across the world. The company provides cable networks, content production and distribution, television stations, and digital streaming services. It also operates other internet-based businesses as well as consumer publishing. ViacomCBS announced earlier this month that it has entered into a comprehensive, multi-year distribution agreement with Google to deliver more content for YouTube TV subscribers.
- Discovery Inc.: Discovery is a global media company providing content across a number of distribution platforms, including pay-television, free-to-air and broadcast television, as well as digital distribution and content licensing arrangements.
- Omnicom Group Inc.: Omnicom is an advertising, marketing, and corporate communications services company. This company offers a variety of traditional advertising and public relations services.
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|
|Market Cap ($B)||EPS Growth (%)|
|Take-Two Interactive Software Inc. (TTWO)||138.19||15.7||114.0|
|Electronic Arts Inc. (EA)||117.36||33.9||107.2|
|Netflix Inc. (NFLX)||436.25||191.9||106.6|
- Take-Two Interactive Software Inc.: Take-Two Interactive Software develops, produces, and markets interactive software including video games and related accessories. The company creates video games for consoles, handheld systems, personal computers, smart phones, and tablets. Take-Two this month reported net revenue growth of 41% and net income growth of 116% for the final quarter of its 2020 fiscal year (FY) ended March 31, 2020. The company noted that it has seen heightened levels of engagement with more people staying home as a result of the coronavirus pandemic.
- Electronic Arts Inc.: Electronic Arts is best known as a video game company. The company develops, publishes, and markets video game software for consoles, personal computers, mobile phones, and tablets.
- Netflix Inc.: Netflix is an Internet subscription services company that offers streaming movies and television shows, and also distributes DVDs by mail. Netflix increasingly is producing its own entertainment content. Netflix reported revenue growth of 27.6% and net income growth of 106.1% for Q1 2020. The company noted in its letter to shareholders on April 21 that it was experiencing temporarily higher viewing and increased membership growth related to COVID-19.
Communications Stocks with the Most Momentum
These are the communications stocks that had the highest total return over the last 12 months.
|Communications Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Activision Blizzard Inc. (ATVI)||72.47||55.8||67.9|
|Charter Communications Inc. (CHTR)||516.96||106.7||36.3|
|Take-Two Interactive Software Inc. (TTWO)||138.19||15.7||33.2|
|Communication Services Select Sector SPDR ETF (XLC)||N/A||N/A||11.2|
- Activision Blizzard Inc.: Activision Blizzard publishes, develops, and distributes video games and related products. Some of its popular franchises include Call of Duty, Guitar Hero, and World of Warcraft. The company announced in March the appointment of veteran Google executive Daniel Alegre to the roles of President and Chief Operating Officer (COO).
- Charter Communications Inc.: Charter Communications is a cable operator and broadband communications services company providing video, Internet and voice services to residential, and business customers. The company also sells video and online advertising, fiber-delivered communications, and information technology solutions to large enterprise customers. Additionally, Charter owns and operates regional sports networks and local sports, news, and community channels. The company reported revenue growth of 4.8% for Q1 2020, but also noted that advertising revenue declined by 5.9% due to COVID-19 related cancellations in March.
- Take-Two Interactive Software Inc.: See above for company description.
YCharts. "Financial Data," Accessed May 22, 2020.
ViacomCBS Inc. "ViacomCBS and Google Announce Expanded Distribution Agreement," Accessed May 25, 2020.
Take-Two Interactive Software Inc. "Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal Year 2020," Accessed May 25, 2020.
Netflix Inc. "Netflix First Quarter 2020 Earnings: Letter to Shareholders," Pages 1 & 3. Accessed May 25, 2020.
Activision Blizzard Inc. "ACTIVISION BLIZZARD NAMES VETERAN GOOGLE EXECUTIVE DANIEL ALEGRE AS PRESIDENT AND CHIEF OPERATING OFFICER," Accessed May 25, 2020.
Charter Communications Inc. "Charter Announces First Quarter 2020 Results," Accessed May 25, 2020.