Nanalyze

This Little-Known 5G Stock is About to Blow

We’ve learned the hard way that researching and writing about exciting technologies doesn’t mesh well with being a prudent investor. Rare is the person who can identify the next Microsoft, get in at the right price and with a meaningful amount of capital at stake, and then sell at the right time. The reality is that no matter how exciting a technology sounds – and they all sound pretty exciting – there’s probably some evolution waiting to disrupt everything all over again. A great example would be 3D printing stocks. Turns out having a 3D printer in every house wasn’t the way forward, and neither was hiring Will.I.Am to be your company’s Chief Creative Officer. The whole debacle left 3D printing investors wondering, where is the love?

The love was to be found in a whole lot of companies developing various methods of 3D printing for metals, and a whole bunch of other companies creating “on-demand manufacturing” business models. Stocks like Proto Labs soared, while stocks like 3D Systems floundered miserably. The key takeaway here is that it’s very difficult to pick the winners, especially when everyone has a different strong opinion about who the winners will be. Let’s take 5G as an example.

5G Stocks Set to Soar

About a year ago we coined a piece on What is 5G and Why is It a Big Deal? and ever since then, a fair number of 5G ads seem to be cropping up on our site claiming to have figured out the recipe for profiting on 5G. Here’s one of them:

A Google Adwords Ad

A Google AdWords Ad – Source: Google AdWords

The first thing that greets you after clicking the above ad is a page asking for your email address. The verbiage “set to soar” should be the first dead giveaway that whatever drivel these tools are selling probably isn’t going to lead to a summer place on Lake Como. The second dead giveaway is the fact that whoever put this whole thing together couldn’t even manage to make the company’s logo “breakthrough investor” match the domain name of “breakthrough investors.”

Investors or investor?

Investors or investor? – Credit: Breakthrough Investor(s)

The third dead giveaway is that not a single piece of information can be found on their sparse website as to who is behind the website that was just created just last year and now wants your email address. A simple “Whois” search shows that the site belongs to some late-20s bearded bloke with a LinkedIn picture that appears to have been taken at a beach bar in Jamaica with his occupation listed as “selling things on the Internet.”

He sells things on the Internet, and he knows which 5G stocks you should buy – Credit: LinkedIn

No matter how excited we are about 5G, we’re not interested in what this guy has to say about it. As we said before, everyone has an opinion, and many of the people offering up their opinions are up to no good.

A Little Known 5G Stock

Then there are those people who are clear about what they’re after. They claim to be experts and they have an expert opinion to offer. And they need your email address to deliver that expert opinion. After all, nobody can deny that 5G makes for a compelling investment thesis, so we’re certainly interested in at least hearing what the experts have to say. Some people might think that a financial magazine is a good place to look for expert opinions – like Forbes. So that’s where we looked.

The first article we came across was another bearded traveler with an opinion on 5G stocks. The first problem we have is with the title of his article – “This Little-Known Stock Will Drive America’s 5G Buildout — And Could Surge 50% In The Next Year Alone.” Again, we see the use of words that have zero objective value to rational investors. Surge, soar, skyrocket, about to blow, this is the same sort of drivel that you see over-the-counter (OTC) stocks use, yet here it is in a Forbes article because someone decided that clicks were a good way to measure quality. The article itself isn’t entirely dreadful, and contains some of the usual “it’ll cost roughly half a trillion dollars to build out the necessary infrastructure” metrics, though the author lost all credibility when he said the following:

Red flags abound – Credit: Someone Who Writes for Forbes

Aside from equating worthless cryptocurrency with other legitimate asset classes out there, the article makes a decent case for a stock that produces some of the “picks and shovels” for 5G. The company he’s talking about is one we wrote about before in our piece on Xilinx – Investing in FPGAs For AI Hardware.

Xilinx isn’t some little-known stock, they’re a $24 billion company that “designs and develops programmable devices and associated technologies worldwide.” One of the decks at their 2019 Analyst and Investor Day clearly expounds on the 5G opportunity for Xilinx with slides like this one.

5G Growth Drivers

5G Growth Drivers – Credit: Xilinx

Let’s not pretend it’s some secret but instead provide people with a metric they can use to gauge the company’s progress towards 5G domination. For example, this simple slide shows us the growth of the “Wired and Wireless Group” segment over time which is where 5G revenues would fall under.

Net revenues by end market

Credit: Xilinx

Reading the Xilinx investor decks yourself can tell you a whole lot more about the merits of Xilinx as a 5G investment than listening to someone who talks about a “little-known 5G stock” and then asks, “Are you tired of settling for small 10%–20% stock gains while others make a fortune?”

Conclusion

The reason we wrote this piece is because a lot of people out there with strong opinions are targeting our readers with ads. Like most media sites, we don’t have the ability to say who gets to display ads on our site. We certainly do keep an eye on who runs ads on our site, and when we see rubbish like what we’ve described in this article, we’re going to quickly call it out. Of course, when more than 80% of professionals who manage money – active portfolio managers as they’re called using industry lingo – can’t even beat a benchmark, they offer no more value than the bearded travelers we’ve talked about who don’t realize that the language they use reveals their poor investing acumen. They don’t have the desire to educate investors, they just want to tell investors what to do with their money.

In our next piece on 5G stocks, we’ll turn to the real experts on the street – the “I wasted three years studying for my CFA so I’m infallible” types – and see just how vastly everyone disagrees on which little known 5G stock is about to blow.

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