Like many of you, I spent [last Friday] morning glued to the television, watching the Inauguration Day festivities – and chaos.
And I [spent more time Saturday] checking out [the protests] going on.
[ad#Google Adsense 336×280-IA]But that’s it. No more distractions.
After that, it’s back to following Rule No. 2 of Your Tech Wealth Blueprint – the five-part system we use to identify the companies best positioned to yield hefty profits… the ones we want to invest in.
That means it’s time to buckle down and “Separate the Signals From the Noise.”
Turn off the news for a while and concentrate on following another one of our Tech Wealth Rules – No. 3 – “Ride the Unstoppable Trends.”
And one of the biggest tech trends going today has little to nothing to do with the presidential transition or the new administration’s goals – but it’s still unstoppable, and that means we need to keep watching it.
I’m talking about the need for broadband wireless internet speeds … known in the industry as 5G.
Today, I’ll not only show you why 5G is destined to become a vital Singularity Era technology that will change the way we work and live.
I’ll also show you how the need for 5G speeds affects me personally – and millions of other Americans.
Better yet, I’ll reveal a fast-growing, small-cap company that’s already playing an integral role in bringing 5G to “the masses”… and is poised to hand its shareholders market-crushing gains.
Take a look…
Tech Rich… Internet Poor
If you had any doubts about the need for next-gen broadband wireless speeds, consider the plight of “poor” Silicon Valley – where I’ve spent much of the past 35 years or so.
The Valley, of course, is the “capital” of the U.S. and global tech economies. At its epicenter is Stanford University, from which sprang Hewlett-Packard back in 1935. Since then, thousands of cutting-edge firms have set up shop in the towns and suburbs south of San Francisco, along the way creating a steady stream of millionaire investors, not to mention billionaire entrepreneurs.
Indeed, Silicon Valley is headquarters for such firms as Apple Inc. (Nasdaq: AAPL), Alphabet Inc. (Nasdaq: GOOGL), Cisco Systems Inc. (Nasdaq: CSCO), Tesla Motors Inc. (Nasdaq: TSLA), Facebook Inc. (Nasdaq: FB), Oracle Corp. (NYSE: ORCL), and Intel Corp. (Nasdaq: INTC). Silicon Valley’s top 10 firms have a combined market value of $2.2 trillion.
Wireless and the Mobile Revolution accounts for much of the success of these firms over the last decade or so – just think of the iPhone, launched 10 years ago this month, alone.
There’s just no question that the world of mobile communications, gaming, commerce, and video is a rich one. Just as an example, spending on mobile games alone over the holidays came in at $967.6 million, according to Sensor Tower Inc.
StatCounter says that 40% of all website visits are done through a mobile device, and that figure is likely to surpass 50% in just the next few years.
So you’d think the valley would be a major mobile phone hotspot.
Not a chance…
According to a disturbing recent report on the state of the wireless industry, the towns and counties in Silicon Valley significantly lag much of the United States when it comes to wireless quality and speeds.
Data supplied by RootMetrics ranks San Jose at 49th and San Francisco at 58th out of 125 metro areas in the quality of wireless service. That means some of the hottest tech executives in the world get worse service than folks in Mobile, Ala., Rockford, Ill., and Chattanooga, Tenn.
Turns out that local political infighting and decrepit infrastructure have “helped” create a wireless world filled with frozen videos, blank web pages, and dropped calls – in the global capital of technology.
But 5G technology promises to break through that bottleneck.
In the past few years, many Americans have benefitted from wireless networks that have been boosted from 3G to 4G. That sped up the time needed to download a video or send a file over a mobile network from minutes to second.
But frankly, it’s been a losing arms race. Whenever new gear is rolled out to boost download speeds, users gobble up more bandwidth – think of all the folks on your block alone streaming Netflix or Amazon Prime each night – causing networks to eventually hit their limits.
But this game of cat-and-mouse is about to end, thanks to 5G.
5G will move data along at 10 to 100 times the speed of 4G. Not only will you be able to download an entire movie in a matter of seconds, but it will open up whole new areas of technology.
For example, 5G will enable the connected and self-driving cars of the future to instantly share data, a crucial consideration when even a second-long delay could lead to a car crash.
And the coming world of the Internet of Everything (IoE), where almost every internet-connected device will be able to share data with the “hive,” won’t truly be effective until 5G is in place.
No wonder global tech leaders are racing to cash in.
- The execs at Verizon Communications Inc. (NYSE: VZ) think their superfast wireless networks will be able to replace fixed-line web access. It’s already testing 5G networks in five locations.
- Nokia Corp. (NYSE: NOK) has been testing 5G in many other parts of the world.
- Intel (INTC) rolled out its first ever 5G chip and modem at CES 2017, laying out plans to target the home, mobile, and auto markets.
- That news came right on the heels of Qualcomm Inc. (Nasdaq: QCOM) saying it will start shipping its own 5G chip this summer.
However, even with all this behind-the-scenes action, building out a full nationwide network will take time. And 5G likely won’t power the mobile data backbone until 2020.
But that doesn’t mean you can’t start profiting from it right now…
The Pole Position
You ought to take a look at InterDigital Corp. (Nasdaq: IDCC).
This developer of wireless technology is always one step ahead of the key wireless industry trends. In fact, it sets those trends.
Since its founding in 1972, InterDigital engineers have designed a broad range of innovations that are used in digital cellular and wireless products and networks, including 2G, 3G, 4G, and IEEE 802-related products and networks.
The Delaware-based firm employs 160 engineers (80% of whom have PhDs) who have been funded with $1 billion in R&D resources over the past 15 years.
Now, InterDigital is pivoting to 5G, because of to the lighting speeds and new tech industry niches it will open up. As one example, InterDigital is designing chips that will underpin what the firm calls collaborative sensor fusion. That framework will enable the millions of IoE devices to seamlessly speak to each other.
InterDigital sees big things for the IoE. It’s is already a top 10 player in terms of IoE patents, and fourth in a category known as “high-strength patents.” After reviewing InterDigital’s IoE patent base, ABI Research named the firm the Hot Tech Research award winner of 2015.
Rather than figure all this out on their own, many leading tech firms simply let InterDigital pave the way, paying the firm a stream of royalties to enable the most advanced wireless technologies possible.
This firm’s roster of technology licensees is astounding – and includes Sharp Corp. (OTC ADR: SHCAY), Sony Corp. (NYSE ADR: SNY), Samsung Electronics Co. Ltd., Fujitsu Ltd. (OTC ADR: FJTSY), Toshiba Corp. (OTC: TOSYY), and hundreds more.
Plus, wireless leader Apple (AAPL) just signed a multiyear deal to license InterDigital’s technology
The company’s decision to license rather than build its own products gives it high margins. Even after accounting for the costs of all the engineering and lawyers needed to protect its patents, the firm still makes 60 cents in profit for every $1 in sales.
And InterDigital has emerged as a shareholder’s best friend. It has used its strong profits to shrink its share count by more than 20% in the past five years, and more buybacks should keep the share count moving lower, and earnings per share moving higher.
The $30 million in yearly dividends it pays to investors merely sweetens the pot…
Patents Bring in the Cash
Shares of InterDigital are trading for around $89, and the firm has a market value of $3.05 billion. Last year, this small-cap likely earned nearly $9 a share, more than 250% above what it earned in 2015.
And don’t forget those barriers to entry – its moat: InterDigital boasts 20,000 patents, the result of $700 million spent on R&D in the past decade.
Add it all up and you can see this is exciting way to play the entire wireless ecosystems and the coming world of 5G broadband in a way that will really add to your net worth.
So remember: [Now that the] inaugural festivities are over, refocus – and start using tech to get on the Road to Wealth.
— Michael A. Robinson
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Source: Money Morning