2 Communication Stocks Set to Ride on Solid Inherent Growth Potential

Industry Overview - The Zacks Communication - Infrastructure industry is benefiting from increased user demand for digital innovations, leading to fiber densification and extensive 5G deployment [1] - Industry players provide various infrastructure solutions for communication networks, including high-speed network access solutions and fiber-to-home equipment [3] Current Trends - Network convergence is a key trend, with operators combining voice, video, and data communications into a single network, which minimizes service delivery costs and expands coverage [4] - There is a focus on higher average revenue per user as firms transition from legacy systems to technology-driven models, enhancing customer service and data traffic management [6] Challenges - High capital expenditures for infrastructure upgrades and soaring raw material prices due to geopolitical tensions are significant threats to the industry [1][5] - Supply chain disruptions from the Russia-Ukraine war and high customer inventory levels are also impacting operations [1] Market Performance - The Zacks Communication - Infrastructure industry has outperformed the broader Zacks Computer and Technology sector and the S&P 500, with a growth of 60.2% over the past year compared to 10.6% for the S&P 500 [10] - The industry currently trades at a trailing 12-month EV/EBITDA of 3.48X, significantly lower than the S&P 500's 17.08X and the sector's 16.28X [12] Notable Companies - IHS Holding Limited operates over 40,000 towers across 11 markets and has seen a stock gain of 36.4% in the past year, with upward revisions in earnings estimates [15] - Anterix Inc. holds the largest licensed spectrum in the 900 MHz band and has experienced an 11.3% stock gain over the past year, with significant upward revisions in earnings estimates [17]