It is no secret that the market sends dislocations across sectors every once in a cycle. During the latest rotation in the past twelve months, the telecommunication services industry takes the podium. With a 20% twelve-month advance, the sector is shining a light on some momentum-winning names.

The Communications Services Select Sector SPDR Fund (NYSEARCA: XLC) is an excellent way for investors to get diversified exposure to all the great names picked for this fund. However, the absolute outperformance comes from hand-picking the market favorites set to rise by double-digit rates.

Some names in the sector, like Verizon Communications Inc (NYSE: VZ) and AT&T Inc (NYSE: T), are looking to attract investors by offering high dividend yields. This is only sometimes good news, especially as prices fall and financials slow; the homework has been done to find safer names offering high growth potential, such as these three stocks.

T-Mobile US

Hovering near its all-time high price of $154.4, T-Mobile US (NASDAQ: TMUS) brings investors a new path for a potential breakout to a new record price. 'Industry leading' became a common term throughout the company's second quarter 2023 earnings press release, grabbing a lot of analyst attention.

Commanding a consensus price target of $182.55 will translate into an implied 34% upside potential ceiling from today's prices. Considering T-Mobile's size of $160 billion approximately, a 34% target jump can only come from massively bullish expectations.

Full-year 2023 outlooks were revised higher across the board. This could have sparked analyst sentiment to assign a more significant upside potential. From net customer additions to merger cost savings and other benefits, management is paving the way for a fourth-quarter pregnant with upside jumps.

By repurchasing up to 58.4 million shares during the year, of which 29.1 million were repurchased during the past quarter, investors can assume two main messages from insiders.

First, the future is confidently expected to be bright per the latest guidance; secondly, the current stock price may be considered undervalued. Investors would be wise to follow these hints when considering a potential purchase in the stock.

Charter Communications

After declining more than 60% from its 2021 all-time high prices, Charter Communications (NASDAQ: CHTR) is at a steep enough discount for investors to consider a purchase at fire sale prices. Here is why it would be an intelligent decision.

The basement valuation investors can lean on is an initial price target of $499.4 a share. However, this target would be nearly half of the company's glory days at its all-time high. Putting the pieces together could form a clearer picture of an even higher valuation.

Considering the massive undervaluation that Charter is showing relative to T-Mobile, investors can see where these price targets may have to be raised eventually. Selling at a 14x price-to-earnings ratio will pale compared to T-Mobile's more expensive 26x. 

This valuation for Charter will also place it below the telecom industry average P/E of 17x. EPS growth expectations for the next 24 months will act as another strength pillar, making Charter a positive outlier once again.

EPS growth expectations for the telecom industry reflect an average of 10.6%, attractive, yes. However, hand-picking the best is where market-beating performance comes from.

Charter Communications is expected to deliver a 15.6% growth rate over this period, justifying analyst and market sentiment for a push to former highs in the stock price.

According to the financials portrayed in the second quarter 2023 earnings press release, Charter management was caught repurchasing up to 15.1 million shares during the year. As is custom by now, investors can spot the subtle message that the stock may be undervalued today.

Comcast

Total capital returned to shareholders during the second quarter of 2023 was $3.2 billion, a giant paycheck for being a loyal investor in Comcast (NASDAQ: CMCSA), a total return that would represent up to 2% of the company's total market capitalization.

Considering that this stock has risen by as much as 22% during the past twelve months, investors can lean on today's 2.5% dividend yield. As financials keep advancing, a payout boost is also possible in the works.

Earnings per share grew by 12% over the year, and analysts are still shooting for a further 10.8% boost for the next twelve months of expected earnings. These compounded past and future growth rates and the current dividend yield will land investors well into double-digit return territory.

Comcast brings a fair share of diversification away from the typical telecom service platform in the industry, as investors are exposed to growth coming from other branches in this business. One prime example can be found in the theme park segment.

Theme park revenue grew by 22.4% over the year, the fastest growing branch according to second quarter 2023 earnings presentations. In the rare case of an industry-wide slowdown or competitive forces becoming more aggressive, investors can lean on the different strengths and disciplines that Comcast brings to the tale.