3 Ways to Play Wearables

03/13/2015 8:00 am EST

Focus: STOCKS

Marshall Hargrave

Contributing Editor, Wyatt Investment Research

One area that has emerged as fairly hot is wrist wearables. And it's about to get a lot hotter as the tech market is abuzz about the launch of the Apple Watch, notes Marshall Hargrave in Daily Profit.

I think this could be pivotal moment for the wearables industry. Time and time again, Apple has changed how we interact with and use technology.

However, some other behind-the-scenes players will capitalize on Apple's ability to make wearables cool. Watches are just the beginning; the potential for wearables is boundless.

Companies that supply technology behind wearables will benefit and they might be getting overlooked right now. Here are three companies that will profit from the impending boom in wearable technology:

Qualcomm (QCOM)

Qualcomm is one of the biggest chip makers in the world and one of the biggest supporters of wearables. Pankaj Kedia runs the tech giant's wearables business and has said, "This trend is not going away."
  
The shares have been pressured of late due to issues in China and losing the chip business for the Samsung S6. The stock is now trading at a price-to-earnings ratio of 15, which is one of the lowest levels we've seen in the last decade.

However, Qualcomm still has plenty of growth opportunities when it comes to taking part in the growth of 4G handsets in emerging markets. Then, of course, there's still the rapidly growing wearables market. 

ARM Holdings (ARMH)

ARM Holdings is another chipmaker, so naturally it will be a part of the wearables boom, especially given that its expertise is low-power, high-performance chips.

The other beauty of ARM is that its chips will power the Apple Watch. And like Qualcomm, ARM will benefit by the continued adoption of smartphones.

But ARM is also focused on the Internet of Things, which goes beyond just the wearables market to connecting all your devices.

Intel (INTC)

Intel has been one of the feel-good stories in tech over the last year. Intel's stock was stuck below $30 a share for over a decade, but the tech giant finally broke out.

Its stock is now up over 40% for the last 12 months. And let us not forget its 2.8% dividend yield, too.

Intel is the largest semiconductor company in the world. It has a massive research and development budget. But it dominates a less-than-sexy business these days, the PC chip market.

However, Intel has already debuted its first wearable computing system that can be used in wearables and smart clothing, so it's making steps in the right direction.

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