Nevertheless, Facebook Inc (NASDAQ:FB) executive Sheryl Sandberg is unfazed by the lackluster performance of the first version. Said Sandberg:
“Facebook Inc (NASDAQ:FB) Home is V1 of what is a very large transformation that we think absolutely will happen, which is rebuilding your phone around people. The phone is an incredibly social device.”
The mobile world had better be ready for V2, V3, or however many versions Facebook tries before it hits the mark. By releasing Facebook Home, Facebook proved its commitment to the changing times. With its user base of over one billion, it’s only a matter of time until the social media giant learns how to cash in on its mobile advertising potential.
Microprocessors anyone?
Whether you are watching football, checking Facebook, texting, or (gasp) talking on the phone, your device will need advanced microprocessors. QUALCOMM, Inc. (NASDAQ:QCOM) makes them.
According to Forbes, QUALCOMM, Inc. (NASDAQ:QCOM) owns a 50% market share in the smartphone application processor market. QUALCOMM, Inc. (NASDAQ:QCOM) also owns 86% of the market in LTE phone modems (the framework for 4G). Forget the Apple Inc. (NASDAQ:AAPL) versus Google Inc (NASDAQ:GOOG) debate, QUALCOMM, Inc. (NASDAQ:QCOM) supplies to both.
In the microprocessing world, Intel Corporation (NASDAQ:INTC) still has the lion’s share of the market. With 65%, Intel Corporation (NASDAQ:INTC) dwarfs QUALCOMM, Inc. (NASDAQ:QCOM)’s 9.4% share. But get ready for the gap to close. Intel Corporation (NASDAQ:INTC) has such a large share because of PCs. The shift from PCs to smartphones and tablets is happening now. And as I said before, QUALCOMM, Inc. (NASDAQ:QCOM) is top dog in those markets.
Time to Buy?
Should you call your broker right now to buy these stocks? Not quite. First we should take a look at the three companies’ P/E ratios:
| Verizon | Qualcomm | ||
|---|---|---|---|
| P/E Ratio | 124 | 5,446 | 17 |
I think Qualcomm is the deal. It’s only trading at 17 times earnings and I would argue it has the most to gain from the mobile revolution.
Verizon and Facebook are certainly a tougher call. I would wait for a pullback to scoop up Verizon (its shares are trading high because it pays out a cushy 4.1% dividend). Facebook? I’ve been bullish on Facebook since it crashed following its IPO. Even with such a high P/E ratio, at just over $24 I think Facebook is going to move up. A company with such a massive user base will find a way to monetize.
Also, as I outlined in a previous post, Facebook has a guide when it comes to advertising revenue: Google Inc (NASDAQ:GOOG). Whether or not you enter buy orders for these stocks, know one thing: the mobile revolution isn’t over.
Marie Palumbo has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook and Qualcomm. Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Companies on the Right Side of the “Mobile Revolution” originally appeared on Fool.com is written by Marie Palumbo.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
