This Chinese Smartphone Stock Is Poised To Soar
Smartphones have been around for a few years now, but they’re still one of the most sought after gadgets on the planet. Recent data show that these revolutionary devices are flying off the shelves at an ever-increasing rate.
According to Gartner, global smartphone sales surged 46.9% year-over-year in the third quarter. An impressive 169 million units were sold worldwide. And the devices accounted for nearly 40% of all mobile phone sales during the quarter.
What’s even more impressive?
The big jump in smartphone sales happened despite a 3.1% drop in worldwide sales of mobile phones overall. Further evidence that the consumer’s love affair with smartphones is strong and growing.
In fact, IDC expects global smartphone sales will increase by 41% this year to a total of 686 million units. If their estimate is correct, it would mean more than double the number of smartphones sold just two years ago.
The crazy thing is… smartphones are expected to continue selling like hot cakes for years to come.
Market researcher IHS iSuppli recently projected that smartphones would account for more than half of all mobile phones sold globally in 2013. If so, smartphones would be taking the lead a full two years sooner than what experts projected just earlier this year.
But perhaps the most stunning sales projection comes from Credit Suisse.
In a recent report to investors, the Swiss financial services giant said annual worldwide sales of smartphones will top the 1 billion mark in 2014. They cite “robust growth” in China’s smartphone market, which they believe will account for 22% of global sales by 2015.
Clearly, smartphones are expected to continue selling at a rapid pace for years to come.
However, the universal adoption of smartphones has also given rise to another trend. A trend that is born out of convenience but could be dangerous for unsuspecting consumers. I’m talking about the trend of storing valuable personal and financial data on your smartphone.
What’s the danger?
Recent data shows that cybercriminals are focusing more and more on targeting smartphones. According to Symantec (SYMC), there were twice as many security threats to mobile phones in 2011 than in 2010.
And these threats are anything but idle.
In fact, they’re costing consumers a boatload of money. Symantec estimates that cybercrime cost consumers a whopping $110 billion in just the past year alone.
This leads to one logical conclusion… consumers need to protect their smartphones from increasingly aggressive cybercriminals.
This is great news for one Chinese company in particular.
The company is the leading provider of mobile security and productivity solutions in China. And if they have their way, they will become the leading provider on the planet.
In fact, they’re already off to a great start.
At the end of last year, the company had over 146 million registered users from over 100 different countries. That’s up from just 35 million registered users at the end of 2009.
The speedy growth in the company’s user base is due to its shrewd business model.
You see, they offer services on what’s called a “Freemium” basis. Users can enjoy basic services for free… but they must pay for more advanced services.
For example, malware scanning, internet firewall, and anti-spamming services are all available free of charge. But virus library updates, account safety, anti-theft, and communication privacy services require a paid monthly subscription.
By offering services at no charge, the company is able to rapidly add new users and create a loyal user base. This user base is then fertile ground for paid subscriptions to the company’s premium service offerings.
Like I said, it’s a shrewd strategy.
And it’s working like a charm…
Revenues grew nearly eight-fold from 2009 through 2011. And after posting net losses in 2009 and 2010, the company generated a respectable profit in 2011.
What’s more, revenues are expected to more than double this year and then grow by a hefty 69% in 2013. And after a slight increase this year, earnings are projected to surge 61% next year.
But here’s the best part…
Despite the robust growth outlook, this company’s stock is grossly undervalued.
At present, the shares are trading at just 6.5x the 2013 earnings estimate. Its price to book is a mere 1.62. And the stock’s PEG ratio is a paltry 0.24.
I think these shares could easily double in value over the next year.
Now, I’d love to give you the name of this exciting company, but it just wouldn’t be fair to my subscribers. You see, I recently recommended this stock in my China Stock Insider advisory service.
However, you can get this stock today and more than 20 other Chinese stock recommendations with a low, quarterly subscription to the service. Just click here for more information.
Profitably Yours,
Robert Morris
Category: Foreign Markets, Stocks
