In addition to the long-term positives above, Cisco Systems, Inc. (NASDAQ:CSCO) is becoming a leader in the cloud computing space. The company has hosted numerous conference calls with Goldman Sachs in recent weeks, highlighting its strength position in a future where businesses are interconnected online.
Reference my article Why Microsoft is the Best Investment in Cloud Computing for a discussion on Microsoft and Cisco Systems as the best cloud investments.
| Aruba Networks | Cisco Systems | Microsoft | QUALCOMM, Inc. (NASDAQ:QCOM) | |
|---|---|---|---|---|
| Market Cap | $1.6 B | $127.7 B | $292.5 B | $110.7 B |
| EPS | ($0.17) | $1.80 | $1.94 | $3.55 |
| P/E Ratio | — | 13.1x | 17.7x | 18.1x |
| Ann. Dividend/Yield | — | $0.68/2.9% | $0.92/2.7% | $1.40/2.2% |
| Beta | 1.7 | 1.2 | 1.0 | 1.0 |
| Short Interest | 17.9% | 1.0% | 1.3% | 1.0% |
| EPS Growth | -133.5% | 33.0% | -29.4% | 24.2% |
| Revenue Growth | 19.3% | 5.1% | 4.1% | 24.6% |
Ancillary play in mobile
A large portion of mobile traffic growth is driven by increased usage and penetration of smartphones. Readers may be surprised to learn that Q1 2013 marked the first time that smartphone sales exceeded traditional feature phone sales in history. According to International Data Corporation, smartphones comprised 51.6% of total phones shipped, or a majority 216.2 million out of 418.6 million total units.
QUALCOMM, Inc. (NASDAQ:QCOM) is a major beneficiary of growing smartphone sales, as its proprietary Snapdragon processor is used in a Who’s Who of mobile devices. CEO Paul Jacobs recently appeared on financial television and stated there’s “a lot of runway” left in the smartphone growth story.
Samsung’s popular Galaxy SIII and new S4, Google Inc (NASDAQ:GOOG)’s Motorola Mobility DROID RAZR HD, Nokia’s new Lumia 920, and Dell’s XPS 10 tablet all have Snapdragon processors developed by Qualcomm. The company also manufactures the 4G LTE modem and multi-band/mode RF transceiver in Apple’s iPhone 5.
I believe that Qualcomm is one of the best stocks to own in the technology universe, an opinion I’ve held since I wrote my first detailed editorial in November 2012 and updated Forget Apple and Google, Buy This Fast-Growing Tech Stock in March 2013.
Foolish takeaway
As of this writing in mid-2013, it appears nothing will be able to slow down the market forces driving an insatiable demand for mobile content. AT&T and Verizon recognized this phenomenon years ago by eliminating unlimited data plans for new subscribers in 2010.
With a long runway of mobile growth ahead, readers should consider Cisco Systems, Inc. (NASDAQ:CSCO) and Qualcomm as the best ideas for investment.
Unfortunately, I cannot recommend Aruba Networks, Inc. (NASDAQ:ARUN) even after the recent sell-off. The company continues to lose market share in the competitive enterprise networking business. Earnings at Aruba Networks, Inc. (NASDAQ:ARUN) have fallen a massive -133% in the last 12 months, while Cisco’s earnings have grown a respectable 33%. Short interest for Aruba also stands at 17.9%.
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The article How to Invest for a 13-Fold Increase in Mobile Web Traffic originally appeared on Fool.com and is written by John Macris.
John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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