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Investment Ideas

While most of the headlines are focused on the oil spill in the Gulf of Mexico or the debt problems in Europe, there are still a few areas of the stock market that individual investors can look to own.

One of my favorite areas is smart phones. You know, those cell phones on steroids. They let you email, surf the web, connect to facebook, and use GPS, and listen to music. They also offer thousands of applications allowing users to trade stocks, calculate their calorie intake, or watch TV shows.

But, the smart phone industry is taking its game up a notch. The next generation of smart phones--called 4G--is just coming to market. These new 4G phones will drive a new wave of smart phone buying, as current users look to upgrade their phones.

The first 4G phone was the Samsung Mondi. It was rolled out last year, but it had limited usage outside of WiMax (broadband wireless access) markets.

On June 4, however, Sprint (S) became the first major U.S. carrier to sell a 4G handset, the HTC EVO 4G. After a few days, it looks like a home run for Sprint, which announced that the HTC EVO 4G broke sales records (over 100,000 handsets) for Sprint stores on Friday June 4.

The success of the HTC EVO 4G provides a hint of how successful the launch of the much-anticipated iPhone 4G will be on June 24.

One important point to keep in mind is that we are at the beginning of the 4G cycle. The carriers are not yet equipped to handle 4G in all of their service areas. For example, Sprint's 4G network is live in only about 30 cities including Chicago, Miami, and Kansas City, but AT&T (T - Analyst Report) and Verizon (VZ - Analyst Report) won't even fully launch 4G service until 2011.

That means we will continue to see real growth from the companies that provide the technology that makes 4G services possible. These companies help manage wireless networks, are the components inside 4G-enabled smart phones, or help wireless carriers become more efficient and profitable.

Four Stocks for 4G

Atheros Communications (ATHR)

ATHR is a leader in the designing of chipsets used in WLAN, Bluetooth, and GPS devices.

In the last 60 days, the Zacks Consensus Estimate for 2010 is up 40 cents to $1.92, and the 2011 Zacks Consensus Estimate is up 40 cents to $2.13.

The Zacks #1 Rank stock trades at 16x 2010 EPS estimates and 15x 2011 EPS estimates.

Broadcom (BRCM - Analyst Report)

Broadcom designs, develops and supplies semiconductors for wired and wireless communications. Its products enable the delivery of voice, video, data, and multimedia content to mobile devices, consumer electronics, and business networking products.

In the last two months, the Zacks Consensus Estimate for 2010 increased 50 cents to $1.83, while the Zacks Consensus Estimate for 2011 increased 51 cents to $2.06.

The Zacks #1 Rank stock trades at 18x 2010 EPS estimates and 16x 2011 EPS estimates.

Skyworks Solutions (SWKS - Analyst Report)

Skyworks offers analog and mixed signal semiconductors worldwide. The company provides power amplifiers and front-end solutions for cellular devices from entry level to multimedia platforms and smart phones.

In the last two months, the Zacks Consensus for fiscal 2010 is higher by 12 cents to $0.99, and the fiscal 2011 Zacks Consensus is up 15 cents to $1.20.

Skyworks is a Zacks #2 Rank stock that trades at 16x 2010 consensus EPS estimates and 13x 2011 consensus estimates.

Triquint Semiconductor (TQNT - Analyst Report)

The company makes products for mobile devices (transmit modules, power amplifiers, and duplexers) and products for broadband wireless networks, GPS, and WiMAX within the client applications.

In the last 60 days, the 2010 Zacks Consensus Estimate is up 8 cents to $0.58, while the Zacks Consensus for 2011 is up 11 cents to $0.69.

Triquint is a Zacks #2 Rank stock that trades at 11x 2010 consensus EPS estimates and 9x 2011 consensus estimates.

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