5 Stocks Set For Next-Gen Mobile Boost

NEW YORK ( TheStreet) - Intel's ( INTC) deal with Inside Secure to bring Near Field Communications (NFC) to its chips has shone a spotlight on an emerging part of the mobile payment industry. There are several ways investors can tap this growing market.

NFC is used primarily for two reasons: payment applications, and outside of payment applications such as accessing information on mobile devices, says analyst Mark Hung at Gartner ( IT).

Payment application has long been talked about, but Hung believes the growth in NFC over the next few years will come outside of payments, and that is where Intel is looking to capitalize.

Future growth will occur in smartphones, personal computers, and consumer electronics, as companies use NFC for information retrieval. "A person could tap on an NFC tag at a museum to learn more about a sculpture or a painting and get the latest information on it," Hung says.

Here are five companies poised to benefit from the growth of NFC in both the payment area, as well as outside of it.

NXP Semiconductor

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Hung said that companies like NXP Semiconductor ( NXPI) and Inside Secure are the two top semiconductor companies in NFC.

He believes that there will be 100 million NFC enabled smartphones by next year, and by 2015 there will be 1 billion units across multiple platforms.

"Intel getting into NFC doesn't shut the door for NXP, as it could get into PCs, since it is a big market," said analyst Vijay Rakesh of Sterne Agee. Rakesh added that the move into PCs is being driven primarily by the upcoming launch of Windows 8, scheduled for 2012. He has a Buy rating and a $24 price target on NXP.

Barclays Capital analyst C.J. Muse was positive on NXP in a recent research note. "We note design wins of 90+ now across handsets and tablets (with Google, Samsung, Sony Ericsson, and Nokia). As a provider of a complete NFC solution (radio, secure element and software), this should provide $2-3 dollars in content per device," Muse wrote. He rates NXP shares at Overweight with a $24 price target.

Shares of NXP have returned 4.9% year-to-date, outpacing the broader NASDAQ.

Google

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Hung said location based services are implementing NFC technology, with companies like Google ( GOOG) and FourSquare benefiting.

Google has been pushing NFC technology since November 2010, and has heavily integrated NFC into its latest version of the Android mobile operating system, Android 2.3, also known as Gingerbread.

It also offers Google Wallet on its line of Nexus smartphones, to help capture some the mobile payments market. Google sends users information about its Google Offers deals, as well as selling coupons and advertisements. The company doesn't take a cut from the amount of the transaction through Google Wallet.

Google shares have returned 3.33% so far this year, broadly outpacing the NASDAQ.

VeriFone Systems

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player
VeriFone Systems ( PAY) provides secure electronic payment solutions, including point of sale (POS) technology, which many merchants use. Hung noted that VeriFone was the leader in this space.

Despite this, the analyst does not see mobile payments taking off relatively soon. The business model and infrastructure needed, he says, "will take a while," despite offering a lot of value to the consumer and the merchant.

Verifone shares trade at 16.3 times expected earnings, according to Yahoo! Finance.

Since the start of 2011, Verifone shares have returned 5.26%, compared to a loss of 3.7% for the S&P 500.

Apple

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

There has been plenty of speculation that Apple ( AAPL) will eventually move into NFC, but the company has not yet added the technology to its iPhone.

Hung said, "I think there is a better than 50/50 chance Apple will put NFC in into the next version of the iPhone."

Apple has been cautious about the NFC market, as the standards are still being worked out, but research firm Bernstein has said in a previous research report that Apple could generate anywhere between $4 billion and $9 billion in additional revenues if it were to implement NFC chips in the iPhone.

Shares of Apple have gained 17.4% this year, among the best performing stocks on the NASDAQ this year.

Rovio

Hung said Rovio, the maker of the popular social networking game Angry Birds, is selling accessories enabled with NFC chips to allow more integration with the game itself. It is selling plush dolls and other accessories with NFC chips in them, and players can scan the accessories with their smartphones and unlock certain levels the game.

Rovio's games have had over 500 million downloads in two years.

-- Written by Chris Ciaccia in New York

>To follow the writer on Twitter, go to http://twitter.com/commodity_bull.

>To submit a news tip, send an email to: tips@thestreet.com

More from Investing

Dow Plunges on Trade War Worries but Walmart and Verizon Finish Positively

Dow Plunges on Trade War Worries but Walmart and Verizon Finish Positively

Trump's Tariff Attack Hasn't Brought Pain to These Hot Stocks

Trump's Tariff Attack Hasn't Brought Pain to These Hot Stocks

Biotech Firm Sarepta Surges 40% on Positive Test Results

Biotech Firm Sarepta Surges 40% on Positive Test Results

18 Auto Stocks Trump Just Ran Over With His China Tariff Attack

18 Auto Stocks Trump Just Ran Over With His China Tariff Attack

3 Ways for Retirees to Protect Their Portfolios In Volatile Stock Markets

3 Ways for Retirees to Protect Their Portfolios In Volatile Stock Markets