The circulating rumors. The leaked photos. Entire websites devoted to the newest look, features, and potential bugs.
I’m talking about the anticipation and buzz for the next generation of smartphones. As we’ve been talking about here in MoneyWire, these phones will be foldable.
The foldable phone frenzy is officially underway in the media, and it’s setting up a huge opportunity for early investors.
Today, only about one half of one percent (0.05%) of the world’s population uses foldable phones. But ultimately, 3.2 billion smartphones will be replaced by foldables. I predict the industry will grow 5,500% in a few years to reach $13.8 billion!
The buzz surrounding foldable phones reminds me of what new smartphone releases used to be like… when avid consumers couldn’t wait to see what the latest upgrade would be about. That eager impatience has waned in recent years, as most new releases have been improvements rather than breakthroughs.
But the next big breakthrough is finally here…
Some industry insiders made their reputations years ago by leaking details about an upcoming smartphone release months before anyone else.
Between 2012 and 2014, tech journalist Evan Blass penned a widely read, anonymous (at the time) Twitter account called @evleaks that leaked glimpses of dozens of new phones and devices.
He released early details about the first-generation Moto X, the Droid Ultra from Motorola (MSI), the Nexus 4 and 5, the Z2 tablet from Sony (SNE), and much more.
He’s still at it, and now he’s onto foldable phones. In a recent tweet, he leaked promotional footage for the upcoming Galaxy Z Flip 5G phone. Not only is it foldable, it takes advantage of another hypergrowth trend on our radar – 5G!
But Blass is far from alone.
The Android Authority recently released details about LG’s new smartphone with the codename “Wing.” The phone is expected to be released sometime this year, and it’s rumored to have a rotating display to take use of a larger landscape screen with a smaller screen underneath.
I can see why the anticipation is back. I got my first taste of these incredible new phones at the huge CES show earlier this year… and I’m a believer.
To be clear, these are not flip phones reincarnated. They can literally fold into and out of pretty much whatever device you need – a smartwatch that can keep tabs on your vitals, a tablet for larger screen viewing, or a cellphone to make calls or text.
But the incredible versatility these phones offer is only one of the many reasons why the world’s largest smartphone makers are rushing to bring this technology to market.
Alphabet (GOOGL) has already invested nearly $1 billion in foldable phones.
LG has allocated $8.5 billion to foldable displays.
Chinese tech behemoth Huawei spent more than $15 billion on research and development in 2018.
Samsung, the world’s largest smartphone maker, has already sold twice as many foldable phones than it thought it would. Now the company predicts it will sell six million foldable phones this year – or three times more than what Apple (AAPL) sold in 2007 when it released the first iPhone.
Apple Insider reported that Apple is also likely working on a foldable prototype. The company just filed a recent patent for a foldable device that includes a sort of sub-display that would show notifications when the phone is folded up.
My guess is that Apple will join the foldable party next year. If the next smartphone revolution isn’t fully underway by that time, Apple would almost certainly kick it into gear – just like it did with the first iPhone 13 years ago.
Investing in the “Guts” of the Revolution
This is a major disruption in the smartphone space will impact communication through the rest of this decade. And as a result, it has important investing implications and opportunities.
The thing is, a lot of investors are taking a conventional route to profit from foldable phones. They’re looking at the obvious plays – the phone manufacturers like Samsung, Apple, and LG.
That’s understandable, but those are huge companies, so it’s harder to get as much bang for your buck.
I believe the perfect investing strategy for the foldable phone craze lies elsewhere – in the “picks and shovels” companies that make the “guts” of these next-generation phones.
I see much bigger opportunities in the smaller companies that make the actual foldable displays. In fact, I’ve created a portfolio of four such stocks in my Investment Opportunities newsletter.
And it got off to an unbelievable start.
One stock shot up more than 20% in just the first two-and-a-half weeks. This company is already the world leader in LCD panels for TVs and monitors. It also makes OLED screens and recently said it will start supplying Apple this year (another reason to expect a foldable iPhone soon).
This is only the beginning, and it’s not too late to get in. In fact, several of the stocks in our portfolio offer fantastic buying opportunities at current prices.
But don’t wait.
With all the media attention foldable phones have been getting recently, I suspect it’s only a matter of time before the train leaves the station.
P.S. I expect the foldable phones hypergrowth trend will likely yield multiple winners throughout the Roaring 2020s.
Do yourself a favor and look at the smaller suppliers and not the mega manufacturers. You’ll find much better opportunities there because it won’t take as much to move the needle… and the share price.
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