The new Internet gold rush is just getting started (SWKS)

Frank Curzio
1 Comment|June 9, 2014

Earlier this year, I told you about one of the biggest trends in technology.
Soon, just about every device you use – including your car, appliances, television, and thermostat – will be connected to the Internet. That means you will be able to control everything through your mobile phone, tablet, or PC.
Networking giant Cisco Systems Inc. (NASDAQ: CSCO, Stock Forum) calls the "connectivity" of these devices and the networks that support them the "Internet of Everything" (IoE).
Cisco CEO John Chambers believes the IoE could be a $19 trillion market. But even if the market only ends up being half of Chambers' prediction, the opportunity will still be enormous.
I told you the best way to invest in this trend is to buy the "nuts and bolts" companies that will help every device get connected.
We're starting to see big gains in some of these companies. But it's not too late to invest in the IoE trend.
Let me explain...
This week, shares of Skyworks Solutions Inc. (NASDAQ: SWKS, Stock Forum) hit an all-time high.
Skyworks is a semiconductor company we hold in my Small Stock Specialist portfolio. It makes "chips" for some of the best-selling mobile phones, tablets, and electronic gadgets in the world – including Apple's iPhone and iPad.
Basically, its products help devices connect to wireless signals. So Skyworks is benefiting from the growing IoE trend.
As you can see in the chart below, shares are up 100% over the past year.

But there's more upside ahead.
You see, the company just raised its earnings and sales guidance for next quarter.
It expects a 48% increase in earnings year over year. That's a huge figure. Most S&P 500 companies had trouble growing earnings 10% over the past 12 months.
Skyworks' chairman and chief executive officer attributes this growth to the IoE trend. He recently said:
As our upwardly revised outlook reflects, Skyworks is capitalizing on the growing opportunity within the Internet of Things as well as increasing analog complexity associated with higher data rate connectivity standards, both of which are enabling us to substantially outpace the growth of the broader semiconductor market.
These macro trends continue to validate our investments in highly differentiated, custom solutions that are facilitating an expanding set of end markets. Based on our design win traction and order visibility, we anticipate continued strength beyond the June quarter as our products continue to gain momentum.

Skyworks is in the perfect market at the perfect time. I see shares going much higher over the months and years ahead.
But it's not the only "nuts and bolts" company in position to profit.
Nuance Communications (NUAN) is another stock we hold in my Small Stock Specialist portfolio.
Nuance is a voice-recognition company. Its technology powers Siri – Apple's "personal assistant" feature that lets users perform tasks on their iPhones (like finding out the weather or a stock quote) by simply talking to them – and other technology like it.
As the IoE trend develops, we'll see this technology make its way into billions of new devices – like appliances and cars.
So it has enormous upside potential – just like Skyworks. That's probably why billionaire investor Carl Icahn owns 19% of the company.
Plus, shares of Nuance are still cheap today.
The company trades at just 13 times forward earnings. That's much cheaper than the S&P 500, which trades at 18 times earnings.
You still have time to buy Nuance at cheap levels... but not for long. The stock is trending higher and several Wall Street firms recently upgraded the stock to a "buy." I suggest getting into this name today.

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I would think Canadian co Wi-Lan ( WIN ) would hold many of the patents in this area .
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June 9, 2014
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