Try These Tech Stocks in 2013
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With the new year coming up, it’s prudent to take a look at some companies that are worth paying attention to. Of course, if you are a long term investor, you probably already have your positions for certain stocks. However, there’s never really a bad time to expand your portfolio, so you may still benefit from this list.
Amazon’s (NASDAQ: AMZN) primary line of business is in the e-commerce space. And here’s some good news for the company – FTI Consulting predicts that online retail sales will grow by 13.5% in 2013. One of the things that FTI attributes this growth to is the penetration of smartphones and tablets. And guess what? The company is making good waves in that space as well.
Amazon recently launched an app for smartphones that allow users to track shipments and delivery dates. The tablet venture is paying off for Amazon as well; according to data released by IDC shipments of Android-based tablets surged by Samsung and Amazon, which grew their share from 9.6% and 5%, respectively, in the second quarter, to 18.4% and 9% in the third quarter. The Kindle is a great platform for Amazon to sell its content and its Amazon Prime services.
The company continues to grow fairly well for such a large player. Third-quarter sales climbed 27% year-over-year to reach $13.81 billion. The only hold up for the company is the fact that their profit margins are fairly thin. The company’s third quarter earnings did not compare to the Street’s expectation either, but that hasn’t really worried analysts.
This chip maker has seen its shares get boosted by the ever-increasing demand for smartphones. "Qualcomm remains our top large-cap pick as the company's focus on integration and a 4G modem leadership helps it outperform a tough environment," wrote Ian Ing of Lazard Capital Markets in a recent note.
Qualcomm (NASDAQ: QCOM) is one of the big beneficiaries of push to high LTE networks. The company provides Apple with a power management chip, an LTE modem and an RF Transceiver for the iPhone 5. The chip maker projected 20% to 26% revenue growth in fiscal 2013 and non-GAAP operating income growth between 14% and 21%. The company’s Snapdragon processors support a wide flavor of 3G and 4G LTE technologies, something that's key in countries such as China, where a diverse range of networks are in use.
In addition, the company recently announced a restructuring to protect its patents, which are an excellent source of revenue. Under the new structure, parent company Qualcomm Inc. owns the company’s patent portfolio. The company is also doing better than the competition, with other component makers such as Intel and Texas Instruments not performing to expectations.
Cloud seems to the buzz word of today, and that’s why we’ll turn to EMC Corporation (NYSE: EMC). The company provides much of the core cloud hardware and software, both for enterprises deploying their own clouds and companies selling cloud services. The biggest clincher for this company is its 80% stake in VMWare. Despite the global spending slowdown, the software maker still grew its third-quarter revenue by 20% compared to the same period last year.
In addition, the company has strong leadership at the management level. The company does have a few drawbacks though, most notably the fact that EMC derives more than 50% of its value from VMWare. VMware accounted for just over 21% of EMC's third-quarter revenue. EPS has consistently increased since 2005 and is projected to do so in 2012 and 2013.
Each of these three companies is set to do well in the coming year. My only concern about these three tech companies is Amazon, which doesn’t always report high profit margins. If you have been investing regularly, you will know that profits are pretty much the only thing that will return value to investors. However, despite this word of caution, all the companies mentioned above are stable and will perform well in the coming year.
ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com, EMC, and Qualcomm. Motley Fool newsletter services recommend Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!