Four Stocks for Cell-Phone Mania

A recent study in Advertising Age reported that the top three "mega brands" of advertising today are Verizon Communications(VZ Quote), Cingular and Sprint of Sprint Nextel(S Quote), with a total of $6.5 billion spent among them in 2005. The only advertisers in the same league are General Motors(GM Quote), Ford(F Quote) and Procter & Gamble(PG Quote).

Can You Hear Me Now?

The result, investors should note, has been a steady increase in U.S. spending on our 850 billion minutes of cellular service per month. The average American's monthly cellular bill is around $49.30, or nearly $600 per year -- a figure that has fueled record revenue gains for providers. In the 12-month period ending June 2006, the industry posted total revenue of $118 billion.

Now if you'd like to invest in these companies to get back some of your $600 a year, I have a few recommendations.

For the risk-takers in the crowd, look overseas for the fastest-growing cellular companies selling at reasonable valuations. One of my top choices is China Unicom(CHU Quote) of Beijing, which sells service through 300 subsidiaries to more than 112 million subscribers in every corner of that vast country. Unicom has grown earnings at a steady clip of 17% to 22% for years, and yet the price-earnings multiple is a reasonable 18. Shares, now going for $10.65, should fetch $13 by next year, up 22%.

Another top choice is NII Holdings(NIHD Quote), which provides Nextel wireless services to businesses in Mexico, Brazil, Argentina and Peru. Growing at better than 30% a year, it trades at a steep and undeserved discount to peers, at 22 times next year's earnings per share. Now selling for $65, it could hit $79 next year.