Which Tablet Makers Should You Invest In?
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So a report caught my eye a day or so ago. It came from Juniper Research and covered the tablet and mobile game app market. It predicts that by 2016, more than $3 billion will be spent on game apps. That's more than ten times the current figure.
It also said that most of the spending will come out of the Far East, China and North America. These markets, already becoming very plugged-in, will only grow more so as things go forward. It's an interesting time to be alive--though maybe not so much if you're a part of the traditional computer game industry.
So I thought it would be a good idea to take a look at the makers of tablet devices and smartphones to get a feel for where the growth will be. Not all of these firms make all, or even most, of their money from mobile devices, but it's a growing market and will soon start commanding some real attention on some bottom lines. I don't claim to know anything definitive on where it ends up, but I can make some (hopefully shrewd) guesses.
Apple (NASDAQ: AAPL)
Apple might not be the granddaddy of them all, but the cool factor surrounding the iPad and iPhone are hard to ignore. And the company's fans are … well ...fanatical. Still, the company seems to justify it. Right now the firm's stock is down, as you should already know. But I continue to believe this is a strong buy opportunity. With 20% of U.S. tech sales coming from the firm there's going to be support for Apple. So if you have it, keep it. Don't let the herd stampede you. If you don't have it, now's the time to buy it. I think Apple bounces back by $100 within a year.
Amazon (NASDAQ: AMZN)
Amazon is a direct competitor with Apple, of course. Its Kindle line of tablets certainly seem to be making up ground. I'm on record as not being impressed with Amazon, though. Sure, they're the biggest online retailer. But that's an easy-to-compete-with title for a firm that's willing to drop the cash to set up the site and promote it properly. I'd be more impressed with Amazon if the firm had a consistent record of actually making money. As it is, the P/E is through the roof (provided we're in a quarter in which they show earnings), it's EPS is negative and God knows when it's all going to come together. I don't own any Amazon, and I never advise anyone to do so.
Google (NASDAQ: GOOG)
Google may not make the tablets but it does make the OS and sell the apps. That's enough to put them on this list if I so say so myself. Google is always a surprising company, constantly innovating in ways that don't always seem to make sense at first glance. However, there's clearly a plan in providing quality services to a wide variety of customers and leveraging each one for a small amount. Everyone knows the firm's stock has been on a run up. I'm willing to bet on the climb and think that $900 might not be more than a year or so away. P/E is good, EPS is good. If it paid a dividend it'd be a perfect stock.
Best Buy (NYSE: BBY)
Surprise! While not a lot of people know it yet, retailer Best Buy is now selling its own line of tablets. Called the Insignia Flex, it's designed to compete directly with the lower-end (read: not the iPad) tablets by Samsung and others. It's yet to be seen how well it'll be received, but Best Buy has a few things going for it. First, the company is trying to make itself the must-stop location for those looking to buy a tablet, and second, there's a lot of Best Buy stores out there to sell the things. Note that this one is also using the Android software and therefore that app store. Very tricky, people. Best Buy's stock hasn't really plunged. It's sort of slowly meandered downhill for a year. Still, it's worth a limited pick up if you have the money, and it just got upgraded by Barclays.
BlackBerry (NASDAQ: BBRY)
God love them, my first smartphone was a BlackBerry. It may seem like an odd choice for a column about tablets, but apps are sold for smartphones as well. And BlackBerry has an install base that can't be easily ignored. It's yet to be seen whether the new BlackBerry 10 can succeed in the crowded smartphone market. If it does though, it'll open doors for app developers. New markets are always appreciated. BlackBerry (formerly Research In Motion) hasn't had a good few years, but there are some early signs that it might be turning its share price around. Shares have more than doubled in the last five months, and that can't all be attributable to hype. I'm very cautiously optimistic about BlackBerry. But you should only put very risky money into it.
Tablets, smartphones and apps for both are a very fast-moving market right now. To play it an investor should be both hard-hearted and nimble. Only put your money into firms in this space when you absolutely know that they know what they're doing and that they have other product lines that can help support the expansion into the market. Whatever the tablet market looks like today, it's going to look entirely different in five and ten years as it matures.
Follow Nate on Twitter: @natewooley
More columns from Nate Wooley
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Nate Wooley has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, and Google. 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!