In the future, the newest adage goes, we’ll do it all by phone. And these days, smartphone stocks are in a gold rush of sorts to beat the competition. That has resulted in more innovative smartphones and quicker phone technologies, additions and upgrades than ever before.
But this smartphone revolution is not without its difficulties. At the same time, most smartphone stocks are still experiencing some growing pains when it comes to connecting with consumers or fending off leading technology like the Apple iPhone.
Here’s a complete look at eight major smartphone stocks and their current average price targets. For some of the stocks listed below, their year-to-date dips against the current market, offering ample buying opportunities. Most of the smartphone stocks listed here – covering manufacturers as well as telecom providers – are below their consensus price estimate and offer decent buying opportunities for investors.
Here’s the rundown:
Apple (AAPL): Established in 1976 in California as Apple Computer Inc., the renowned American multinational corporation now goes solely by Apple Inc. (NASDAQ: AAPL), dropping the “Computer” portion of its name in 2007 to reflect its ongoing dive into consumer electronics. That new focus includes the iPhone, which is currently fueling a worldwide phone fever – 1.7 million iPhone 4s sold at last count – and giving the stock a strong boost. Wall Street notes an average price target of $340, according to Thomson/First Call, some +30% above its current stock price. Apple stock is already up about +24% year-to-date, bounding high above the nearly flat performance of the Dow and S&P.
Research in Motion (RIMM): Corporate America’s big favorite thus far, Research in Motion (NASDAQ: RIMM) and its Blackberry still remain beloved when it comes to company smartphone plans. The Canadian telecommunication and wireless device company was named the fastest-growing company worldwide in 2009 with a growth of 84% in profits over three years. The bad news is that the momentum has waned and RIM is now seeing the iPhone and Android OS steal some of its potential sales. But there is still upside to be had, according to Wall Street. According to Thomson/First Call, RIMM has an average Wall Street price target of about $84, about +47% above current pricing. RIMM stock stands at about -20% so far on the year, trailing the broader stock market’s performance.
Google (GOOG): The cloud computing, Internet search and technologies corporation Google (NASDAQ: GOOG) is making waves with its foray into smartphones with its open-source Android operating system. Dubbed Android, the operating system for mobile devices offers application development for a wide variety of phones. Google is listed as having an average price target of about $630 a share, according to Thomson/First Call, about +28% above the current pricing for the stock. Google has had a rough 2010 so far, down -30% compared to the small gains eked out by the Nasdaq, Dow and S&P.
Nokia (NOK): The world’s largest manufacturer of mobile phones, Finnish communications corporation Nokia (NYSE: NOK) owes its popularity in large part to China, where it boats 27% market share – overshadowing Apple’s slow performance in the region. With global annual revenue of41 billion Euro (that’s roughly $55 billion U.S. dollars) and operating profit of 1.2 billion euro as of 2009, Nokia seems to be a stock to watch. However, investors shouldn’t get too excited. NOK has an average price target of $10 according to Thomson/First Call. That’s roughly at cost for the price of the stock, which is currently trading in the upper $9 range. Like some others, Nokia is down -25% against the +2% gain for the Dow and +0.5% gained by the S&P 500 index.
Motorola (MOT): With its red hot Droid smartphones, Motorola (NYSE: MOT) had great earnings in the second quarter, though it is losing ground to HTC. Motorola’s handset division focuses on smartphones using the aforementioned Google Android mobile operating system. The first phone to use the Android 2.0 was released in 2009 as the Motorola Droid, and saw great initial success – moving 1.6 million units in the first week. Whether Motorola can come out with newer phones that replicate those sales remains to be seen. MOT has an average price target of $9, according to Thomson/First Call, which is about +18% over current share valuation for the stock. MOT stock has been rebounding recently, but remains fairly even with the market at a slight loss for the year so far.
AT&T (T): With a current lock as the only iPhone provider, AT&T (NYSE: T) holds its strength in its solidarity with Google. But for how long? Apple is reportedly shopping around. Meanwhile, T stock has been unimpressive. AT&T is the second largest provider of mobile telephony service in the United States, with over 85.1 million wireless customers, and more than 210 million total customers. T stock is listed by Thomson/First Call as a having an average price target of $30, only about +12% over the value of the stock. AT&T shares are down about -5% compared to small market gains for the Dow and S&P, but a hefty dividend yield of over 6% has helped some investors suffer through the recent choppiness in shares.
Verizon (VZ): When Bell Atlantic merged with GTE in 2000, Verizon (NYSE: VZ) was born. Since then, it’s been all about the network, for the most part. With talk about landing iPhone service in the near future, there is serious growth potential for investors. At the same time, however, it’s important to acknowledge that VZ may suffer AT&T’s already notorious data crunch issues if that happens. Because of this, among other uncertainties, Thomson/First Call lists the price target of the stock at about $31, only about +4% above the average price target of the stock. Verizon has had a rough 2010, down about -11% so far this year compared with a fairly flat market.
Sprint (S): Kansas-based telecommunications company sprint (NYSE: S) is still lagging far behind Verizon and AT&T, but it’s finally adding subscribers according to the latest earnings report. After subscriber losses over numerous quarters, Sprint is pointing out that demand for the 4G HTC Evo and the Blackberry Curve may have gotten it over the hump. And its stock is reflecting those good numbers. According to Thomson/First Call, Sprint has an average Wall Street price target of about $5.50, roughly +19% over current valuations for the stock. S stock is up about +25% year-to-date, significantly better than the major indexes on the year.
As of this writing, Burke Speaker did not own a position in any of the stocks named here.
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