The Wall Street crowd is starting to get the picture.
On the cover of a recent issue of Fortune magazine: “The Death of Cash,” there was an article examining an impending transition that I’ve been talking about for some time.
The magazine examined some large companies as the drivers in this new technological push, which hinges largely on the continued adoption of portable devices, like cellphones, that can be used much like a credit or debit card. Its winners are Google Inc (NASDAQ:GOOG) because of its Google Wallet initiative, which I was among the first to cover; eBay Inc (NASDAQ:EBAY)’s PayPal; Visa Inc (NYSE:V); Mastercard Inc (NYSE:MA); Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB).
Those are great companies that will lead the trend. But while everyone else is looking at the obvious “winners,” it will take some time for this macro trend to move the needle for companies as big as these.
Instead, I’ve got my eye on a small company that’s at the forefront of this game-changing trend.
I first told StreetAuthority readers about this game-changing technology in an article about another stock in this sector I like: payment processing firm Zebra Technologies Corp. (NASDAQ:ZBRA).
I like this concept for a lot of reasons. For one, I hate it when my credit card is taken out of my view. Two of my cards — a debit card from my bank in Texas and my Capital One Visa — were hacked recently, which meant both cards needed to be replaced. I didn’t get stuck with any of the fraudulent charges, but replacing a card is still a hassle — and securing the number on a special microchip would render fraud far more difficult.
It’s also going to open up mobile payments to a whole new audience, notably among young people and a portion of the population that doesn’t use banks. That’s because not only is the credit card in Google Wallet available as a prepaid card — no credit required — it is also available on a prepaid smartphone through Virgin Mobile. This will certainly help push this technology into the mainstream.
And while I like Zebra Technologies Corp. (NASDAQ:ZBRA) as a way to profit from this technology, my research has led me to a stock I like even more.
As I said, it’s not Google Inc (NASDAQ:GOOG). Nor do I think it will be Sprint Corporation (NYSE:S), which runs the network, and it’s not Citigroup Inc (NYSE:C) or MasterCard, which administer the card Google Inc (NASDAQ:GOOG) Wallet uses.
Instead, the likely winner is a company most people have never heard of — NXP Semiconductors NV (NASDAQ:NXPI). It makes the special chips that go in the phone that “talk” to cash registers. The technology is known as near-field communications (NFC), and NXP Semiconductors NV (NASDAQ:NXPI) is the leader, with critical existing supplier relationships with all the major phone manufacturers, including Apple Inc. (NASDAQ:AAPL).