ASX-listed telecommunications stocks (as well as their international counterparts) have enjoyed a number of great share price gains over the past five to 10 years. And rightly so, many have grown earnings exponentially and lapped up a seemingly endless supply of new customers and revenue.
With the mobile market and fixed internet markets now at saturation point, it's important investors look for companies that can grow revenues organically and deliver long-term gains in the form of strong dividends.
However, there always should remain a place in portfolios for companies that can disrupt the industry and bring new technologies to the market. Those companies always make the best investments.
One American company that is set to do exactly that is Sierra Wireless (Nasdaq: SWIR). Although Sierra has been around for some time, it's engaged in 21st century wireless technology solutions like machine-to-machine communication and mobile computing. With the relatively high AUD, now might be the time to take advantage of an investment in US markets.
Arguably, one thing Australian companies do better than their US counterparts is pay dividends. Telstra (ASX: TLS) pays a renowned 5.6% fully franked dividend. Its dominance in both mobile and fixed internet markets will enable it to keep up or even grow its dividend payout for years to come. In addition to the company's acquisitions, expansion into key growth areas and overseas presence provide room for the telco giant to grow.
One small company that is high risk and leveraged to growth is Newsat (ASX: NWT). Newsat has transitioned from an ordinary telecommunications services provider to Australia's only pure play extra-terrestrial company. It has a number of orbital slots and its Jabiru satellite development program will help it grow revenues for years to come. However investors will have to be patient and, as noted above, it remains a risky investment.
Foolish takeaway
Many technology, telecommunications and internet stocks throughout the world are reaching new highs as investors push prices higher to take advantage of the rush. However, savvy investors could also look for other industries that will be complemented from a boom in technology. Peter Lynch was famous for saying, "During the Gold Rush, most would-be miners lost money, but people who sold them picks, shovels, tents and blue jeans (Levi Strauss) made a nice profit."
Remember no stock is a buy at any price and it's not just the obvious names that will stand to benefit from our reliance on technology or the internet.
