Beating the Market With a Chip on my Shoulder

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- It goes without saying that 2012 so far has been the year of the chips. Names such as Qualcomm ( QCOM) and Intel ( INTC) have clearly regained their pre-2001 form and are certainly looking for more.

What is not a mystery in all of this is what has been the catalyst of such resurgence -- of course, it's the growing popularity of smartphones and mobile devices. Obviously, whenever these products are mentioned, the first names that come to mind are Apple ( AAPL) and Google ( GOOG) -- with good reason. But what I have begun to realize is that when considering the names that are printed on top of the mobile devices, it has now become equally as important to consider the names that are inside those devices as well.

Speaking of "inside," this was how chip giant Intel grew to one of the largest companies in the world as it was inside virtually every PC that left the production lines -- regardless of brand. So it stands to reason that the same effect will occur for the companies that are "inside" the rise of the smart phone and devices market -- many of which combine various social networking, gaming, scheduling and other business functions that have quickly moved from "wants" to "must-haves." And analysts expect the usage of these devices to continue to explode. So the question is, why do some of these names continue to trade at a discount? It seems investors have not sought to take advantage or they're not paying enough attention.

In a recent article, I talked about how enamored I have become with Qualcomm, not only is the company an industry leader, but when you consider that its brand now controls the internal component space of approximately 250 million smartphones and other devices, it becomes clear just how just underappreciated the stock has become. For the quarter ending March 25, it reported net income of $2.23 billion or $1.28 per share on revenue of $4.94 billion -- representing an increase of 123% above the $999 million net income from the year-ago period. But the shares have recently declined due to not only supply chain problems, but also stiff competition from the likes of ARM Holdings ( ARMH) and Texas Instruments ( TXN).

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