Communication Services Sector Trading Strategy

Last Updated on July 30, 2022 by Oddmund Groette

The communication services sector has seen stable long-term growth, as electronic communication has now become an important part of life for people and businesses.

What is the S&P Communication Services sector?

The S&P 500 Communication Services sector consists of those companies included in the S&P 500 that are classified as members of the GICS Communication Services sector. Companies in this sector are involved in businesses that make communication possible — either through the internet, phone, airwaves, cables, wired, or wireless. These businesses provide the infrastructure that enables the transmission of information in audio, texts, voice, and video. Sub-sectors in this sector are telephone, cable, and internet service providers.

The ETFs that track the sector include Vanguard Communication Services ETF (VOX) and Communication Services Select Sector SPDR Fund (XLC). And from their performance, the sector has made an average return of 11.8% per year over five years.

What are the 5 biggest stocks in the sector?

The 5 of the biggest telecommunication stocks in the S&P 500 index include:

Alphabet Inc. (GOOGL) and (GOOG): This is the parent company for Google, the communication services giant that provides various products and platforms for information and communication, including Android, Chrome, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play store, as well as Fitbit wearable devices, Google Nest home products, and cloud services. Alphabet Inc.’s class A (GOOGL) and class C (GOOG) stock prices have a total market cap of about $1.47T as of July 2022 with a year-to-date return of 23.15% and 22.47% respectively.

Meta Platforms Inc. (META): Meta Platforms, formerly known as Facebook Inc owns communication and information sharing platforms, such as Instagram, Facebook, and WhatsApp. Meta generated about 97.5% of its revenue from advertisement offerings to marketers. Its stock outperformed the broader market, with a year-to-date return of 50.40%. Its total market capitalization is $495.66B as of July 2022.

Verizon Communications Inc. (VZ): The company’s mobile network, Verizon is the largest wireless carrier in the United States, with over 120 million subscribers. Despite suffering a crash in its stock price; Verizon has been on a price recovery since May 2022 with a year-to-date return fairly above 3% and a total market capitalization of around $212.908B.

Comcast Corporation (CMCSA): Comcast Corporation is the second largest cable television and cable broadcasting in the world by revenue. Its products offering include telephone service, internet service, cable television, and pay TV. The telecommunication giant has been on a downward movement since August 2021, and it currently has a total market cap of $183.67B as of July 2022.

AT&T Inc. (T): The company provides telecommunications, media, and technology services worldwide. It offers wireless voice and data communications services and sells handsets, wireless data cards, and wireless computing devices. It also provides data, voice, security, cloud solutions, outsourcing, and managed and professional services, as well as customer premises equipment for multinational corporations, small and mid-sized businesses, government agencies, and wholesale customers. As of July 2022, its market cap is $146.616 billion.

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