Mobile stocks are a hot commodity for investors right now, and for good reason.
Given the rise of smartphones and tablets, mobile stocks that are a part of this ecosystem are poised for the most success. It’s question of being where your customers are, and considering that more than half of all Americans have a smartphone to access the web, customers are increasingly living in a mobile world.
So how can you identify the best way to invest in mobile stocks — and also which companies to avoid in a digital age thanks to their failure to evolve?
Here are a few tips:
Data Providers are Great ways to Invest in Mobile Stocks
The power of mobile devices stems from connectivity — so those telecom stocks that keep mobile users online are crucial.
The obvious plays at home are big guys like Verizon (VZ) and AT&T (T), which collectively hold about 61% of the U.S. wireless market. But don’t overlook the rise of mobile abroad — including Chinese telecom China Mobile (CHL), a massive company worth about $200 billion that commands over 750 mobile subscribers. That’s twice the population of the entire United States!
Smartphone Providers are Another Good Way to Invest in Mobile Stocks
Beyond the data, there’s the hardware and software. And that leads us to the big players in the smartphone space including Apple (AAPL) with its iconic iPhone and iPad, or Google (GOOG) with its Android software that runs on more than three-quarters of the world’s smartphones.
These are the big ones, though Microsoft (MSFT) is indeed coming into its own with its Surface and Windows Phone gadgets. There will assuredly be other, smaller players that are good mobile stocks to buy, but be careful of investing in companies falling too far behind behind — such as BlackBerry (BBRY) which is down about 90% in the last five years thanks to dwindling sales.
Entrenched App and Software Companies Stealthy Ways to Invest in Mobile Stocks
Everyone is wired these days, and that means that consumers can shop on the go and consume media wherever they feel like it. Thus, if you want to move beyond the service providers and the phones themselves, you want to be involved with the mobile stocks that are serving up information and entertainment on smartphones and tablets.
There are video game companies like King Digital Entertainment (KING), the maker of the highly addicting Candy Crush Saga. There are social media companies like Facebook (FB) and Twitter (TWTR) which are among the most popular ways to communicate on the go. There are companies like Netflix (NFLX) and Pandora (P) that allow for streaming video and audio, respectively.
One of the simplest things you can do is pay attention to the way you use mobile technologies and the apps that you use most. Or if you’re browsing apps, take notice of what the most popular downloads are and what other tech-savvy consumers are getting into.
It’s always risky to bet on high-growth tech stocks, but the best mobile stocks to buy always have a bit of a fad flavor.
But heck, some people though the iPhone was a fad when it first came out. So while some mobile stocks will fall away, others could be the next $500 billion company that becomes a household name.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.