VirnetX Holding Corporation (VHC), Vringo, Inc. (VRNG), Spherix Inc (SPEX): A Trio of Patent Stocks to Buy and Hold Long-Term

According to the analyst:

Spherix Inc (NASDAQ:SPEX) has been a small company with minor business operations. Now it becomes an idyllic shell for merging in an IP portfolio. Next step: complete the merger and announce the high-profile lawsuit.

With the broad appeal of Vringo, the recent success of ParkerVision, the track record of Iroquois Capital and Hudson Bay, and lots of IP investors looking for the next real IP play… Spherix Inc (NASDAQ:SPEX) is the next play.

Spherix Inc (NASDAQ:SPEX) has total cash of $3.45 million and no debt. The company held no patents before its recent deal with Rockstar, but the merger with North-South Holdings will bring in a portfolio of 222 patents acquired from Harris Corporation, along with $2 million in cash. The stock has jumped over $4 since last week (ending July 26, 2013).

Summary

While the possible benefits and financial rewards of patents can hardly be overestimated, there are several pitfalls investors should be mindful of. The risk that a key patent could be found invalid, either following a legal decision or simply as the result of a rumor or attack, or patent claims that are not broad enough to prevent the emergence of non-infringing alternatives are big risks that are often costly.

That being said, the four companies listed above know what they’re doing. As long as Apple Inc. (NASDAQ:AAPL) continues to innovate and apply for patents, there will be reason to invest in the company. Investors should watch the Vringo v. Google case closely for any new developments. In the case of Anthony Hayes and his track record, I see him using the “Vringo” model, and whatever these patents are that Spherix Inc (NASDAQ:SPEX) is getting, I am confident Hayes will achieve maximum profitability.

Bill Edson has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.

The article 3 Patent Stocks to Buy and Hold Long-Term originally appeared on Fool.com.

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