Telecom services are in demand and rapidly growing, but the sector is prone to volatility. Here’s what investors should know before pouring money into the telecommunication sector.
Telecommunication services stocks belong to the telecommunications sector of the stock market. In total, there are 11 stock sectors as defined by the Global Industry Classification Standard. Each sector contains a distinct slice of the market.
The telecommunication sector is made up of companies that facilitate global communication — think telephones, mobile devices and the Internet. While the industry got its start in the 1830s with the invention of the telegraph, it’s since grown to encompass telephones, radio, computers and more.
The telecom sector can be broken down into three primary sub-sectors:
There are two ways to invest in telecom stocks, each with its own set of benefits and drawbacks. Individual stocks within the sector offer the opportunity for targeted investing for those who want to support individual companies. ETFs track the entire sector and bring diversification to a limited portfolio.
Stocks tend to be more profitable but are also more volatile. ETFs, on the other hand, offer stability but are accompanied by fees that typically range from 0.03% to 2.5% (many ETFs come with fees under 1%.)
Whether you want to purchase stocks or ETFs, you’ll first need a brokerage account. Here’s a quick look at the investment process:
A beginner’s guide to exchange traded funds (ETFs)
The list below shows some of the telecommunication services stocks Canadian investors can buy into on either Canadian or US exchanges. If you’re interested in a specific company, take some time to carefully research it — including its history and financials — before you buy in.
You can invest in telecommunication services ETFs from Canada, but if you’re looking for more options, you can also explore ETFs that trade on stock exchanges in other countries like the NYSE in the US. There are several Canadian-based brokerages that offer access to international exchanges on which telecommunication services ETFs trade including Interactive Brokers and Questrade.
Funds that track the telecommunication services sector include:
The graph below tracks the performance of the Communication Services Select Sector SPDR ETF (XLC) in the US. Tracking the performance of ETFs is one way to monitor the overall trend of stock sectors.
The global economy relies on telecom services now more than ever before. This pushes telecom services into staple territory — a service that can remain in high demand, regardless of global, political or socioeconomic change.
As the telecom industry continues to rapidly evolve, investors have the opportunity to get in on the ground floor with low-cap companies on an upward trajectory. Growth is an inherent part of this stock sector, and investors that select their securities wisely have the opportunity to turn a sizable profit.
Rapid technological change puts pressure on seasoned providers while promoting ferocious competition among startups. This sector is prone to volatility due to the fast-paced nature of the industry. There’s plenty of room for profit, but during a bear market, losses can be sizable.
Knowing how to assess telecommunications companies can help you understand which companies are succeeding and choose stocks more wisely. Metrics to evaluate include:
Compare brokerage accounts to find the right fit. Once you open an account, you can begin investing in stocks and ETFs.
The telecom sector offers investors the opportunity to back companies that facilitate global communications. While rapid growth is an attractive perk, investors should be wary of losses during a down market. Review your brokerage account options across trading platforms for the account best suited to your investment needs.
Persistent inflation and uncertain economic conditions can prompt fear. Answer six questions to know when to protect your retirement savings.
Read more…
Find out how long term investments work and how to use long term investments to build your wealth.
Read more…
Robo-advisor assets under management in Canada are expected to increase 107% in the next five years.
Read more…
Steps to owning and managing Yoshitsu Co. stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing Cerberus Cyber Sentinel stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing Fresh Vine Wine, Inc stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing DGX with 24-hour and historical pricing before you buy.
Everything we know about the Nuvectis Pharma IPO plus information on how to buy in.
Steps to owning and managing BuzzFeed, Inc stocks, with 24-hour and historical pricing before you buy.
These are the best renewable energy stocks to buy now in Canada.
A failed SPAC deal pulled the plug on this vertical farming company’s plans to go public. But you can buy stock in other sustainable farming companies.
Everything we know about the Reddit IPO plus information on how to buy in.
Want to know how to buy and sell stocks in Canada? Find out what you need to know in this simple, step-by-step guide.