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Investing In And Profiting From Smart Phone Companies
Once only a niche product, Smart Phones are now used by hundreds of millions of people world wide. In the past, a high end phone was a nice to have, now however it is a necessity for many of us.
The Smart Phone market is vast, with tremendous growth potential still in emerging markets. So how can we invest in and profit from this consumer trend? Let’s take a look at what companies are involved in this market.
The New Leaders
The first company that comes to mind when mobile phones are discussed is Apple with its iPhone (Nasdaq: AAPL). The company has consistently outperformed the stock market for several years and its devices are ubiquitous. In the last 12 months, Apple shares are up 80%.
While everyone knows that Apple makes a great product, they may not realize that Samsung actually ships the most number of Smart Phones worldwide like their flagship Galaxy S3. Unfortunately, Canadian investors are not able to easily purchase Samsung shares as it does not trade on Canadian or American exchanges. It trades on Seoul, London, and Luxembourg exchanges.
Google (Nasdaq: GOOG) is also a major player in the Smart Phone market with their Android operating system and Galaxy Nexus phones. With last year’s purchase of Motorola, Google is heavily invested in the Smart Phones. While Google’s business is still predominantly search advertising, it will be interesting to see what they do with Motorola.
The Old Leaders
Technology trends can seemingly change overnight and a great product one day could be out of favor the next. Both Nokia (NYSE: NOK) and Research In Motion (TSE: RIM) were former market leaders but have succumbed to different circumstances.
Nokia is attempting a turnaround with its Windows based Lumia phones and Research In Motion is exploring its options for the sale of the company. Shares of both Nokia and RIM have been beaten into the ground but they could see some upside if their outlooks improve. Contrarian investors may be interested in these companies, however they are very risky at this stage.
Other Investment Options
Investors should also look at the component makers who provide the various chips needed in these devices. The following companies all provide technology to Apple for the iPhone 4S, as well as others.
- Texus Instruments (Nasdaq: TXN) makes touch screen controllers
- Qualcom (Nasdaq: QCOM) makes the 4G LTE chip
- Broadcom makes wifi/bluetooth chips
- ARM Holdings (Nasdaq: ARMH) licenses their processor technology
- Cirrus Logic (Nasdaq: CRUS) provides audio chips.
Related: How to Buy Stocks
As you can see, there are numerous companies involved in the Smart Phone market, the above list is just a few. While no one knows exactly what the future holds, these companies are poised for growth. In order to diversify and take on less risk, a NASDAQ ETF (Nasdaq: QQQ) or a Semiconductor ETF (NYSE: XSD) provide other investment options to ride the Smart Phone and general technology wave.
About the Author: Andrew Martin is a personal finance and investing blogger from Toronto, Ontario with a background in technology. His blog, The Part Time Investor aims to help Canadians build wealth.
6 Comments, Comment or Ping
1. Goldberg
Average Joe who thinks he can beat the 32,000 Wall Street Analysts is asking to get burn.
By far, most readers on of this site have a full-time non-finance job. Since investing is a hobby, chasing volatility (as all new tech stocks are) should not be their primary aim.
If it hasn’t paid a dividend for at least five straight years, don’t touch it. Anything else is greed – thinking you know better than those 32,000 analysts at predicting which company will do better. You don’t. Many of these companies have growth already priced in, see their higher than average P/E.
FrugalTrader portfolio doesn’t have trendy tech growth stocks like Apple. Neighter does mine. Nor should yours.
June 27th, 2012 at 11:35 am
2. Steve @ Grocery Alerts Canada
My wife has APPL but we plan on selling once it hits over $600 (again). It is too stressful owning these types of shares.
Stick to the companies that have monthly services not the one-time charge.
June 27th, 2012 at 2:44 pm
3. Non-Tech Investor
Investing in technology and finding leaders is like gambling. There is absolutely now way you will know when today’s tech leaders will be tomorrow’s losers. Take RIM as just one recent example of getting taken out by the next cool thing. One day as hard as it is to believe, Google and Apple will the old leaders. Are you sure you will be able to predict this future before everyone else and get out in time?!
June 27th, 2012 at 3:21 pm
4. PartTimeInvestor
Everyone has a different tolerance for risk, timeline, etc. There are no sure things in tech stocks! They should be viewed as short-medium term investments.
June 27th, 2012 at 5:45 pm
5. Charlotte@EverythingFinance
Mobile phones are definitely the way of the future. Guessing which one will succeed is the problem.
June 30th, 2012 at 7:51 pm
6. SheThinksImCheap
A couple updates: Apple reported earnings and missed expectations. While there may be some short term pressure on the stock I see upside leading into the iPhone 5 launch in October. Also, I’ve renamed The Part Time Investor to She Thinks I’m Cheap!
July 26th, 2012 at 1:09 am
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