4 Companies Ready to Cash in on a Nexus 5

Speculation about a Nexus 5 smartphone is overshadowing the new Android operating system.

So Google (GOOG) unveiled KitKat as the name for the next version of its Android operating system. In the video, a capture of an employee using an unnamed Nexus phone fueled speculation a possible Nexus 5 smartphone will be released. If the rumors of a Nexus 5 are true, there are a number of companies that stand to benefit.

LG (LPL) was identified as producer of the mysterious Nexus 5 (a bit of a giveaway since its logo appeared on the device). Shares in the company are up sharply since bottoming in late June. LG trades at a Price to Book ratio of 1x. The company has improved its balance sheet by reducing long-term debt steadily over the last four years. The company still needs demand for LCD TVs to strengthen, and is developing an OLED TV to spur demand. And in the second quarter, tablet and smartphone sales declined significantly. A Nexus 5 release could reverse this decline.

Click on the interactive charts below to see data over time. 

<p>Your browser does not support iframes.</p>

The Nexus 5 could have a Snapdragon 800 made by Qualcomm (QCOM) and a 5-inch display. Qualcomm shares are at a high, and could continue to move higher after the new Nexus is released:

<p>Your browser does not support iframes.</p>

With a 7-band LTE, the device would be compatible on both the Sprint (S) and AT&T (T) networks. AT&T’s shares now yield a generous 5.39%, thanks to the stock declining from a high of $38.51 in April. Sprint shares do not pay a dividend. But the company is lowering the cost of servicing its debt, and recently announced a private placement, saying it would use the funds to redeem or service outstanding debt.

<p>Your browser does not support iframes.</p>

Bottom Line

Interest is high that Google will officially announce a Nexus 5. If Google meets the strong demand with sufficient unit availability, many companies will stand to benefit. When the Nexus 4 was released last year, demand was so high that many buyers were faced with an “out of stock” message. Income investors might want to consider AT&T, given the high dividend yield. LG shares could benefit too, though stronger demand for televisions would be a better catalyst. Qualcomm shares are already at another high, so the upside may be limited. A dip in its shares may offer a better entry point.


Written by Chris Lau. Data sourced from Zacks Investment Research. 



© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.