We’re in the early stages of a long-term trend in mobile technology — not a jolt to a new environment — and each bold step forward also brings new challenges that we didn’t see until we arrived at the new place.
For example, Intel Corporation (NASDAQ:INTC) and Qualcomm, Inc. (NASDAQ:QCOM) announced earlier this week at the World Mobile Congress in Spain that they have been working on new biometric security apps for mobile devices.
According to Merriam-Webster, biometrics is the measurement and analysis of unique physical or behavioral characteristics (such as fingerprint or voice patterns) especially as a means of verifying personal identity.
Why Is Biometric Security Such a Big Deal?
Think about what we keep on our smartphones. Think about the mobile payment systems like Apple Inc.‘s (NASDAQ:AAPL) ApplePay, eBay Inc‘s (NASDAQ:EBAY) PayPal or Google Wallet from Google Inc (NASDAQ:GOOG). Now you have a device that not only has all your contact information, can place calls around the globe, has files and data both personal and private, but now gives you approved use of debit and credit cards.
Now imagine if a dumb human loses his or her smart phone. It’s not a phone any longer, and it’s going to be significantly more problematic to solve this loss than just backing up your contact list.
The more our digital footprint becomes inextricably linked with our mobile computing capacity, the greater the need to protect those mobile devices.
And that’s where biometrics come in.
Now, early iterations of biometric security apps have been around for quite a while. Computer-maker Asus has had Smart Logon facial recognition for years, and of course, Apple included biometrics on its iPhone 5.
Choosing the Biometrics Winner
There are scores of biometrics companies out there developing specialized niches for clients. Most of them are making industry products; devices that allow access to buildings or rooms or files. That bascially means limiting access from a small group of people to a smaller group of people.
The challenge is creating a robust system that allows a large group of people to use the system but allow only one, unique user. Then, make that highly selective device robust enough that it can be knocked around for a couple years in purses, pockets, backpacks and infants’ mouths.
That’s the attraction of large companies like INTC and QCOM stepping into this growing opportunity. They know how to build big, well and sturdy.
Plus, INTC and QCOM are chipmakers. So,they have a leg up on integrating these biometric systems into chips for almost anything. Then, the phone-maker doesn’t have to find a biometrics app provider and integrate it into the rest of the phone; the phone-maker can use a chip with the biometrics security embedded and sell it to the consumer as a benefit.
Regarding these two chip-making behemoths, the better play here is INTC. QCOM is having troubles in Asia, and there’s talk that Apple might not use Qualcomm’s Snapdragon chip on its next iPhone.
It’s not that QCOM will collapse if it loses that Apple business, but there’s no real place for it to make it up at the moment. That uncertainty is worth playing with such a formidable stock. Better to avoid QCOM for now.
As for INTC — it’s on a roll. Intel’s aggressive move into the Internet of Things (IoT), or sensor market, was done for the purpose of advancing in devices. It’s one thing to make chips for mobile phones, but it’s entirely another to build chips for smart mobile computing devices.
What’s more, INTC is making huge inroads into smart clothing, smart cars, smart houses, you name it. These are all part of the IoT trend and we’re just getting started on this ride. That’s the perfect time to buy into a big player that is in the front of the pack.
Intel stock is reasonably priced and kicks a nice 2.8% dividend to reward long-term investors.
For more aggressive investors looking for a potential takeover play in this sector as consolidation will be coming in the months and years, look at Aware, Inc. (NASDAQ:AWRE), a specialized biometrics player that has been around for more than 20 years. Aware stock gets a B rating from Portfolio Grader and looks like a smart snack for big fish.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.