[Editor’s note: This story was previously published in February 2019. It has since been updated and republished.]
After several months of aggressive posturing and painful tariffs, the trade war may finally reach a positive resolution. Recently, Treasury Secretary Steven Mnuchin said the trade talks with China were close to the “final round.” With this news, investors can choose to dial up the risk-reward ratio with cutting-edge tech stocks.
Tacitly, the thawing in U.S.-China relations is an admission that the tariffs have hurt both sides. But now it appears that the Trump administration can bring the trade tensions to an end. If so, this would obviously greenlight recently embattled tech stocks. However, speculators can take a position now before the wave of intense buying interest takes over.
If you’re feeling confident towards this latest diplomatic headline, I’d also look into smartphone stocks. Although “peak smartphone” is a serious problem, it largely affects individual, premium competitors like Apple (NASDAQ:AAPL). But mobility and connectivity themselves will continue to mold and shape our personal and professional lives.
Whether it’s the integration of digital assistants in our homes, or the brave new world of automated transportation, all these innovations are rooted in the Internet of Things. That means smartphone stocks, no matter how volatile they get, offer viable longer-term opportunities.
Here then are four tech stocks that leverage connectivity for profitability:
Alphabet (GOOG, GOOGL)
If you have a long-term outlook on tech stocks, it’s mandatory that you consider Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). For one thing, GOOG stock represents total domination of the internet. Google ranks as the world’s number-one search engine. At 93% market share, it’s not even close.
But what I really like about GOOGL stock is that management acts like they have something to prove. One example is Waymo, their autonomous driving company.
Another reason to consider GOOGL is it’s smartphone business. Between its Android OS and its Pixel phones, Google should continue to profit from smartphone proliferation.
Typically, most investors of tech stocks focus on the industry’s front face. That’s only natural, as they generate the most media attention. However, underlining the direct competitors within the consumer-electronics arena are manufacturing services companies like Jabil (NYSE:JBL). As the tech space expands into greater areas of our lives, JBL stock residually benefits.
But what separates Jabil from rivals in the space is that the organization has expanded with the industry. Today, JBL stock offers exposure to multiple capabilities, including 3D printing, driver-assistance systems, cloud computing and medical technologies.
Additionally, the tech firm has significant implications for smartphone stocks. Modern smart devices can’t market themselves merely on connectivity. As consumer expectations rise, so does demand for smaller and thinner devices. That presents manufacturing and functionality challenges, but they’re also areas in which Jabil thrives.
JBL stock has skyrocketed this year, gaining nearly 25%. Admittedly, shares are a bit overheated for my liking. But I’d seriously consider any dips as buying opportunities.
Ceragon Networks (CRNT)
When most folks think about tech stocks, they usually conjure up images of Silicon Valley. While some of the greatest names in the sector hail from the region, another top location is Israel.
And although Tel Aviv-based Ceragon Networks (NASDAQ:CRNT) isn’t necessarily a household name, CRNT stock is positioned to benefit from the transition to 5G. Ceragon specializes in wireless backhaul solutions, meaning their services will see increased demand as networks and manufacturers make the transition.
Additionally, the company has business in the communications for the maritime and energy industries. Like commercial telecom, these sectors will more than likely offer sustained revenue channels.
CRNT stock has suffered significant volatility. But despite the nearer-term risks, I believe the longer-term fundamentals will eventually support the share price.
To conclude my list of cutting-edge tech stocks, I’m going to go extremely speculative with Xiaomi (OTCMKTS:XIACY). Xiaomi is a Chinese firm, so you can expect volatile trading based on trade-war news.
At the same time, I see massive opportunities for smartphone stocks that focus on low-cost mobile solutions. As smartphones spread to markets where consumers make less money, companies like Apple will have difficulty penetrating profitably. However, low-cost Chinese leaders like Xiaomi thrive in this environment.
It’s crazy-risky, but XIACY stock nonetheless offers a compelling narrative.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
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