4 Stocks for Mobile Communications

Investors like to gravitate to investment themes because they are easy to understand, tend to last for longer than a few months, and can deliver solid returns. Longer-term investment themes could range from aging of the population, converting to clean energy, or using mobile communications devices.

The key is to identify a trend, outline an investment theme for that trend, and then look for companies that are profiting from that trend.

One trend that stick out is the increased use of mobile devices for more than just talking. Everywhere you look people are texting, instant messaging, and surfing the web on their cell phones, smart phones, net books, and laptops. This trend toward mobile communications will continue to become a bigger part of people’s lives as more people want to be able to communicate anytime and from anywhere.

To be sure, nearly everyone is aware of Apple (AAPL - Analyst Report) and the iPhone, or Research in Motion (RIMM - Analyst Report) with its Blackberry devices. For this article, however, I wanted to look at the companies that are working on the networks that allow all of us to send calls, receive texts, or read zacks.com from our electronic devices.

These companies help manage wireless networks, store data, or help wireless carriers become more efficient and profitable.

Four Stocks for Mobile Communications

Atheros Communication (ATHR) is a leader in the designing of chipsets used in WLAN, Bluetooth, and GPS devices. The company recently reported fourth-quarter revenue of $188 million, 89% year over year, but missed analyst earnings estimates. Atheros earned $0.32 per share, missing the Zacks Consensus Estimate by $0.08. The earnings miss was more than offset by management’s outlook, and analysts covering the stock increased their estimates. In the last 30 days, the Zacks Consensus Estimate for 2010 increased from $1.26 to $1.53, while the 2011 Zacks Consensus Estimate increased $1.48 to $1.73.

Cisco Systems (CSCO - Analyst Report) is the worldwide leader in networking for the Internet. On Feb 3, Cisco delivered a solid earnings report. The networking giant earned $0.35 per share, beating the Zacks Consensus Estimate by $0.05. Subsequently, analysts have been increasing their estimates. The consensus earnings estimate for fiscal year 2010 is $1.35, up from $1.26 in the last 30 days, and $1.53 for fiscal year 2010, up from $1.45.

SanDisk (SNDK - Analyst Report) makes the small NAND-based flash storage cards that are used in handheld electronic devices. SanDisk reported fourth-quarter earnings per share of $1.18, which blew away the Zacks Consensus Estimate of $0.62. Analyst estimates for 2010 stand at $2.00, up from $1.16 in the last 30 days. The Zacks Consensus Estimate for 2011 is $2.15, up from $1.02 in the last month.

Tekelec (TKLC) products are used to help mobile network operators manage the IP core network signaling and mobile data. Put simply, the more people use their mobile devices to download data or send text messages, the more growth Tekelec will have. On Feb 11, TKLC reported fourth-quarter EPS of $0.28 versus the $0.16 consensus estimate. Management also offered a 2010 outlook above analyst predictions, and EPS estimates have been moving higher. The Zacks Consensus Estimate is $0.92, up $0.10 in the last month.

Read the full analyst report on SNDK

Read the full analyst report on ATHR

Read the full analyst report on TKLC