Cheap Entries to the Smartphone Wave

One of my ongoing research projects of late has been looking for companies that fit into the smartphone trend that Jim Cramer has written about several times this year.

Mobile computing is going to be a powerful social and economic trend in the years ahead, and a lot of money will be made in this space. Jim has posted his index of stocks on the site before, but most of those are simply too expensive for me to even consider buying. As a deep-value investor, I find that the idea of paying those multiples of earnings and assets gives me a case of the cold sweats. I simply cannot do it.

As a result, I spend some time each week running scans to find cheap technology stocks that fit fit my investing criteria and are in a position to ride the smartphone wave. Some, like Audiovox (VOXX - commentary - Trade Now), do not fit directly into the smartphone world but are still involved in mobile and electronic communications. I like and own this stock. Mobile entertainment and gaming will grow almost as fast as the phone market, and the company is heavily involved in those areas. At 60% of tangible book value and half the stock price in cash, it is a too-cheap-not-to-own stock in my opinion.

I have recently come across a few other stocks that are going on the watch list to buy on weakness. The first is Advance Analogic Technologies (AATI - commentary - Trade Now). The company makes power-management semiconductors used to regulate power usage in mobile devices including cell-phones. Its products are meant to extend battery life and allow devices to be smaller and lighter in design. In addition to cell-phones, its chips are used in electronic gaming and computing. One of its chip designs is used for panel backlighting in the fast-growing HDTV marketplace as well.

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At the time of publication, Melvin was long VOXX, and he will be buying SYMC after this is published, although positions may change at any time.

Tim Melvin is a writer from Stevensville, Maryland, who spent 20 years a stockbroker, the last 15 as a Vice President of Investments with a regional firm in the Mid Atlantic area. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Melvin appreciates your feedback; click here to send him an email.