This article was published in the May issue of Money magazine.
You don't need Siri to tell you that mobile technology is just getting started.
Shipments of smartphones are forecast to surge 65% and tablets are expected to nearly double by 2017, led by strong growth in China, India, and Brazil, according to research firm IDC. Meanwhile, rumors abound of bendable screens and eye-scrolling technology just around the corner.
So what's the best way to capitalize on this promising trend?
Pick Apple ...
Until last fall Apple (AAPL) was synonymous with mobile, and its price reflected that.
Shares hit an all-time high in September but have plunged nearly 45% since then (they're down 25% since I recommended the stock in January). Investors fear the iPhone maker may not have another hot product in its pipeline.
Related: Apple's latest earnings
This is an overreaction. Rob Majteles, managing partner at Treehouse Capital, says slowing growth concerns are more than factored into the stock, which trades at a low price/earnings ratio of 9, based on estimated earnings. The shares also yield 2.7%. And since Apple sits on $137 billion in cash, an increased dividend payout seems likely. "I'd buy a high-quality company like Apple at this valuation any day of the week," Majteles says.
… Or play the field
Of course, an even safer strategy would be to spread your bets.
Not sure which phonemaker will ultimately win the market share wars? Invest in a cross-section via First Trust NASDAQ CEA Smartphone Index ETF (FONE). In addition to Apple, the fund owns shares of Android leaders Samsung and HTC, as well as Nokia (NOK) and BlackBerry (BBRY).
Another option: Growth-oriented investors can seek out undervalued shares of companies that sell vital parts to multiple phonemakers.
Morris Mark, president of Mark Asset Management, owns wireless chipset developer Qualcomm (QCOM), whose technology is used in virtually all leading smartphones. About a third of the firm's sales come from licensing royalties, giving it a lucrative revenue stream for the next decade. Charlie Smith, chief investment officer at Fort Pitt Capital, likes SanDisk (SNDK). The flash-memory-card maker has transitioned from the price-sensitive consumer market to supplying manufacturers like Apple and Samsung directly.
Finally, an agnostic play on mobile, with appeal to income investors, is through the wireless networks that stand to benefit from increased data usage as smartphones proliferate worldwide. The top holdings in iShares S&P Global Telecommunications ETF (IXP) are U.S. carriers AT&T (T) and Verizon (VZ), whose shares each yield about 4%. The fund also owns leading international carriers such as China Mobile (CHL) and Mexico's America Movil (AMX).
There's a lot riding on BlackBerry's new smartphone, which is about to hit the U.S.
So far, investors seem to be in the smartphone makers corner.
Shares of BlackBerry (BBRY) rallied nearly 11% Monday.
"I'm not dead yet!" could be BlackBerry's mantra, to quote Monty Python. After multiple misses and few hits, the Canadian smartphone maker seems to be on the right path.
The Z10, which features an all-touch keyboard, will make its U.S. MORECatherine Tymkiw - Mar 11, 2013 12:13 PM ET
Google is reporting earnings after the bell Tuesday and all eyes will be on the search giant's expenses as it transitions deeper into other markets.
Last year, Google (GOOG) completed its biggest acquisition ever, when it paid $12.5 billion for Motorola Mobility. That deal gave Google access to more than 17,000 patents that will help keep lawsuits from Apple (AAPL) and Microsoft (MSFT) at bay.
Gaining Motorola also opened a window into MORECatherine Tymkiw - Jan 22, 2013 11:59 AM ET
Oh, how the tables have turned in the smartphone world ... at least when it comes to stocks.
Apple shares continued to take a tumble, while shares of Research in Motion rallied again. Traders on StockTwits could barely contain themselves.
$AAPL breaks below $500. Meanwhile, $RIMM up nearly 25% in less than 2 trading days.
Yes, RIM (RIMM) shares jumped more than 10% Monday. And the mighty Apple (AAPL), the most valuable tech company in MOREBen Rooney - Jan 14, 2013 12:38 PM ET
Research in Motion is hoping to get its groove back with the upcoming launch of BlackBerry 10, but whether it will work is anybody's guess.
For now, investors are willing to give the company somewhat of a chance. Shares of RIM (RIMM) rose 5% Thursday following news that the U.S. Immigration and Customs Enforcement agency will begin a pilot program early next year to test the company's new smartphones and MOREHibah Yousuf - Dec 13, 2012 1:00 PM ET
After a few moments in the sun, smartphone pioneer Research in Motion is again feeling the wrath of fickle investors.
Shares of the BlackBerry-maker fell 6% in afternoon trading Tuesday.
RIM (RIMM) shares had been on a tear over the past few months. The stock rose to about $12 on Monday, nearly double the low it hit in late September.
The advance has been driven in part by hopes that RIM, which has MOREBen Rooney - Nov 27, 2012 1:53 PM ET
Amazon.com is in advanced negotiations to buy the mobile chip business of Texas Instruments, according to Israeli newspaper Calcalist, which would put the online retail giant on the path to becoming a manufacturer of smartphone and tablet processors.
Shares of Dallas-based TI (TXN) rose nearly 3% following the report, while shares of Amazon (AMZN) declined slightly.
Amazon's Kindle Fire tablet is currently powered by a TI processing chip, and the company has MOREHibah Yousuf - Oct 15, 2012 12:44 PM ET
Google's stock hit an all-time high of $750.04 in late trading Monday, before pulling back to a record closing price of $749.38. The new marks topped the previous records set in November 2007.
Shares of Google (GOOG) have rallied 16% this year, as the company continues to dominate in search and makes strides with its Android mobile platform. Just last month, research firm IDC reported that Google's Android had gained a whopping 68% MOREHibah Yousuf - Sep 24, 2012 4:23 PM ET
Nokia's stock plunged after the introduction of the company's two new smartphones, which run on the latest Windows 8 operating system, failed to woo investors.
The unveiling of Nokia's Lumia 920 and Lumia 820 smartphones lacked "positive surprises, carrier announcements or specific launch dates," noted Jennifer Fritzsche, senior analyst at Wells Fargo, calling the company's event Wednesday a "disappointment."
Ahead of the announcement, Fritzsche was expecting that Nokia (NOK) would announce AT&T MOREHibah Yousuf - Sep 5, 2012 2:43 PM ET
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