Wednesday, May 06, 2015

3 Cutting-Edge Tech Stocks to Buy

You've probably never heard of these tech stocks -- but they've got amazing potential for your portfolio

Source: ssoosay via Flickr
If you’re reading this, chances are you’re already familiar with some big-name tech stocks. Actually, even if you’re not a techie, you’ve definitely heard of the big players in the industry and may already have some of them in your portfolio.

So, rather than go on about the merits of tech stocks everybody already knows, such as Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Apple Inc. (NASDAQ:AAPL), or Facebook Inc (NASDAQ:FB), I’d like to introduce you to some alternative technology stocks to buy.

The technology industry is massive and includes a plethora of publicly traded companies that offer outstanding potential for portfolios of all shapes and sizes. But, many impressive stocks remain unnoticed simply because the media passes them by in favor of more “exciting” companies with in-your-face products that generate a viral buzz across the Internet.

So even if you’ve never heard of these, here are three cutting-edge tech stocks to buy:

NXP Semiconductors NV (NXPI)


Market cap: $24.5 billion
1-Year Performance: +61.2%

Whether you realize it or not, you probably use products developed and manufactured by NXP Semiconductors NV (NASDAQ:NXPI) every day. NXPI makes a wide range of microchips and related electronics, but the ones most likely to end up in your hands will be inside your smartphone or embedded into your credit cards.

NXPI manufactures the Near Field Recognition (NFC) chips that let you pay for purchases using your iPhone and Apple Pay, the touchless payment system sweeping the world this year. But, Apple isn’t NXP Semiconductors’ only customer. NXPI sells its NFC chips to multiple other smartphone and tablet manufacturers, including Samsung Electronics Ltd (OTCMKTS:SSNLF), Google, HTC Corp, LG Display Co Ltd. (NYSE:LPL), Motorola Solutions (NYSE:MSI), Nokia Corporation (NYSE:NOK), and Sony Corp (NYSE:SNE).

As NFC systems increase in popularity and more retailers install capable checkout machinery, NXPI chips will be included in even more mobile devices.

The other place where chips manufactured by NXP Semiconductors are likely to be found is inside your wallet. Those tiny gold microchips embedded into your credit cards aren’t just for decoration. In fact, those chips are designed to combat fraud and identity theft — they generate a unique identification code for each transaction, which prevents the cardholder’s information from being re-used if it’s stolen.

Even better for NXPI stock, both Visa Inc (NYSE:V) and MasterCard Inc (NYSE:MA) have anOctober deadline requiring that all credit cards have such embedded security chips. Interestingly, most of the world has already switched to the chip-PIN transaction method, making the U.S. one of the last major countries still using the swipe-and-sign procedure. Considering that nearly 50% of all credit card fraud occurs in the U.S., a switch to embedded security chips will be a major plus not just for U.S. consumers, but for NXPI stock as well.

Over the past year, NXPI stock has soared more than 60% to $97 per share.

Sierra Wireless, Inc. (USA) (SWIR)


Market cap: $1.2 billion
1-year Performance: +83.2%

By now, you’ve surely heard of the Internet of Things, a terribly mundane name for an amazing and exciting future where nearly every “thing” is connected to the Internet, from your car to your thermostat, even your home appliances. This is a future that will be here before you know it — in fact, there are already billions of devices and gadgets connected to the Internet, and experts have predicted that more than 200 billion devices will be online by 2020.

Sierra Wireless, Inc. (NASDAQ:SWIR) might be in the most advantageous position of any technology company as the IoT evolves. SWIR manufactures machine-to-machine modules, which is a fancy way of saying the company makes the parts needed for hardware to connect to the Internet. As of December 2013, SWIR controlled more than 34% of the M2M market, providing these modules to major manufacturers of Internet-ready hardware.

As the expansion of the 4G LTE environment continues, particularly in China, Sierra Wireless will benefit from increasing demand for Internet-ready machinery. This demand will coincide with strong growth in the automotive and infotainment industries, as more auto manufacturers look to install always-online capabilities in new vehicle models. According to IHS, more than 152 million cars will be connected to the Internet by the year 2020, and SWIR stock will grow right alongside them.

SWIR stock currently trades more than $36 per share and is up more than 80% over the past year. The company isn’t huge, as it’s market cap is only $1.2 billion, but the future is promising and SWIR will continue growing.

In February, quarterly earnings were reported and Sierra Wireless beat analyst expectations with earnings of 29 cents per share on $149 million in revenue, an increase of almost 26% over the prior year’s quarter.

February’s earnings are a continuation of stellar performance, as SWIR’s November 2014 earnings report illustrated earnings of 24 cents per share on $143.3 million in revenue, and a 77% jump in net income to $7.7 million.

Intuitive Surgical, Inc. (ISRG)


Market cap: $18 billion
1-year Performance: +37.4%

Unless you’re a surgeon, you probably haven’t heard of Intuitive Surgical, Inc. (NASDAQ:ISRG). But, if you’ve ever undergone a minimally invasive microsurgery procedure, there’s a good chance ISRG products were involved.

Intuitive Surgical designs and manufacturers surgical systems and devices, most notably the da Vinci Surgical System, which is a computerized console that allows surgeons to perform major procedures inside the body using a sophisticated robotic platform. Tiny instruments — including powerful 3-D cameras — are inserted through small incisions and manipulated by surgeons using the device while viewing high-resolution video on the attached monitor.

Advances in medical technology that reduce the need for large incisions while allowing surgeons to maintain complete control are on the forefront of industry evolution. The precision with which procedures can be completed using the da Vinci system is, in some cases, actually better than instances where surgery is performed entirely by hand.

The quality of a physician’s eyesight, which is paramount to any procedure, will decline over time, ultimately resulting in an otherwise exceptional practitioner being sidelined. However, with the da Vinci Surgical System’s high-definition 3-D cameras, the lifespan of a surgeon’s career can possibly be extended.

ISRG stock currently trades above $483 per share and is up more than 37% over the past year. With a market cap of $18 billion, ISRG is a large-cap tech stock in the medical industry that’s poised for impressive growth in the years to come.

Article originally appeared on InvestorPlace (05/06/2015)