My big 2014 pick

TomAndersonAfter a great year like 2013, you have to wonder if the market can hold up.  It’s easy to make money in a bull market but what happens if the market is flat or worse even down?  You have to find stocks that are so appealing that they can go up even in a down market.  Tech is a great place to look for companies that can accomplish this task and we’ve found a company that seems to be on the verge of breaking out.

Two of biggest technology shifts in the last three years have been the adoption of smartphones and the shift from PCs to Tablets.  If you had bought Apple (AAPL) under $100, in 2008, that would have been the best way to play it, but who has $550 to spend on 1 share of stock when margins could be coming under pressure.  Now that Google and Samsung are nipping at Apple’s heels, you need to find a way to profit regardless of who wins.

The best part is, there is another leg to the growing coming in 2014, possibly even this week…

Invensense (INVN) makes microchips called accelerometers and gyroscopes, which are components in smartphones.  These components are becoming more important as the three major handset manufacturers compete head to head by building out their features rather than cutting price.  Accelerometers are used for changing the picture on a phone or tablet from portrait to landscape when you turn it on its side, a necessary feature to compete today.  Gyroscopes are used to know where a phone is and when it’s moving.  These components are important for getting map directions and using a phone as a pedometer.

When smartphones were first released, there were 4 things that people used the devices for: making phone calls, sending email, listening to music, and playing games.  Today they have replaced laptops and do much more.  People are now using phones to get real time driving directions (including speed trap alerts), get nearby restaurant recommendations based on your location, and even count calories as you walk. My wife is a certified personal trainer and uses her smartphone constantly.  Now people expect to be able to use these features, nobody wants to take a step back.

The next leg of growth is likely to be smart watches.  Samsung is leading the charge with a $299 model that looks like a traditional watch, but Apple is expected to follow along shortly.  This has the potential to be an explosive product if it is done correctly, and Invensense is at the cutting edge of the trend.  Since watches integrate with handsets, it is important for Apple and Google to follow along quickly with a rich feature set.

Beyond the new market of watches, there is substantial opportunity left in smartphones.  Apple is not yet a customer.  Recently Apple brought in Bosch gyroscopes but incorrect readings may jeopardize the relationship if Apple decides to move to a multi vendor strategy.

The market opportunity not only looks huge but there is a catalyst for the stock with something right around the corner.  On January 7th, the Consumer Electronic Show will begin in Las Vegas and wearable technology will be getting numerous headlines.

I think that Invensense will be one of the most important companies to watch in 2014 because of the potential for explosive growth.  In our newsletter, Tech Stock Jackpot, we go into more detail on the market, competitors and valuation as well as keeping you up on current events.  Whether you are a subscriber or not, keep an eye on this one.  It could be the biggest tech name in 2014, and if you’re a subscriber to my Tech Stock Jackpot recommendation service I’ll be giving you the full commentary on when to get in and when to get out of stocks like this one- with tech stocks it’s very important that you’re not too late or too early to the party!

Tracking the Jackpot,

Tom Anderson.

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