T-Mobile US (NASDAQ:TMUS), Verizon Communications (NYSE:VZ), and AT&T (NYSE:T) have been in wireless wars. T-Mobile merged with Sprint in 2021 to gain an advantage in the 5G network. Consequently, T-Mobile leads the 5G race in the US as AT&T and Verizon Communications play catch-up. Investors want to know which of the three companies is best to bet on.
Due to strategic issues from the past decade, AT&T and Verizon Communications have retained a combined 50% market share in the wireless market. The success came from smartphone manufacturers making deals to sell exclusively through either of the two carriers. That era is gone, and a new one is nigh.
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The 5G network changes the wireless market, and the beneficiaries will be first-to-market firms like T-Mobile US. With 5G leadership, T-Mobile is slowly hiving off the market shares of competitors.
AT&T together with Verizon Communications, respond by offering highly flexible credit terms for the sale of new smartphones. The credit terms carry a condition that the consumers do not shift loyalty to the competition for a period of 24 months. That strategy may not be very successful for both AT&T and Verizon.
T-Mobile has a strong growth opportunity. A quick assessment of financial performance shows that Verizon Communications has a PEG ratio of 3.46. AT&T has a PEG ratio of 2.15, while T-Mobile has 1.95. Comparatively, the valuations of Verizon and AT&T are inflated more than the valuation of T-Mobile. Fundamental analysis confirms that T-Mobile US is a better buy among the three.
At a valuation of $51, Verizon is trading below all key moving averages. It is also well below the moving average of $55. In the case of AT&T, the stock is trading at $23.79. The price is the lowest it has been over the last two years, and the bearish momentum continues. The pattern on the RSI shows that the stock is likely to remain under pressure for longer.
T-Mobile US at a valuation of $130 just crossed above the 50-day moving average. The valuation is pushing both MA 10 and MA 20 to rise above the 50-day. Momentum indicators show a bullish pattern that is gaining traction. The stock is, therefore, expected to rise further above the current valuation.
T-Mobile beats industry performance with 97% gains
At the time of presenting this analysis, T-Mobile US returned 96.89% in capital gains. For the same period, Verizon lost 6.32% while AT&T lost 28.04%. Further analysis of the valuations demonstrated that both AT&T and Verizon are on strong bearish momentum. Overall, T-Mobile is the better bet among the three.
Summary
T-Mobile US performed better than AT&T and Verizon Communications. PEG ratios indicate T-Mobile US is a fundamentally strong firm. Leadership in the 5G network is a key source of competitive advantage for T-Mobile US.
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