High-Return Investments in Mobile Potentially Worth the Risk

By Markets Fool.com

As many industry pundits predicted, the world has gone mobile. The PC industry isn't exactly dead, but it's certainly stagnant, as many a tech company has learned -- sometimes the hard way. But others, including Google , Apple , and Facebook recognized early on that consumers were on the go, and they were ready.

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Another trait shared by these leading mobile players is the outstanding returns enjoyed by their shareholders over the years. Naturally, high-return investments bring with them inherent concerns, particularly valuation. Are investors too late to jump onboard the mobile train? Not when it comes to these three behemoths.

A bite of the Apple
Last quarter reinforced what iFans have known for some time: The Apple lovefest is alive and kicking. Consistently one of the world's most favored brands, Apple's share price has nearly tripled in the past five years, and the results are even better for longer-term shareholders. Sure, there are concerns, but based on last quarter's results, it appears Apple's stellar performance won't slow anytime soon.

As the world's largest company, just meeting expectations simply won't do. And as we saw last quarter, Apple -- thanks to its latest smartphone iterations, the iPhone 6 and 6 Plus -- blew the doors off by generating a record $74.6 billion in revenues, and recording a nearly 50% jump in earnings per share. That would be impressive by any standards, but it's even more so considering Apple's $728 billion market capitalization.

Rumors are already swirling that a new smartphone-- the iPhone 7 -- is in the works and will be available to iFans as early as September of this year. Just in time for the holidays? That sounds familiar, and could be enough fuel on the fire to outpace 2014's Q4. Personally, I'd still like to see a bit more revenue diversification and not so much reliance on the next iPhone release, but there's no denying its working, which is why Apple remains a sound mobile investment.

Different tack, same results
Google has opted for a different approach than Apple to dominate the mobile marketplace, but it's working just as effectively. No, Google doesn't manufacture smartphones and tablets as Apple does, much to the chagrin of its naysayers. The thing is, it doesn't have to.

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Last year, Google's Android operating system ran over 81% of the world's smartphones and surpassed the billion unit mark for the first time. And it gets better. Google also owned two-thirds of the tablet OS market in 2014, and while that figure is expected to decline in the coming years, just as Apple's piece of the tablet OS pie is, research company Statista still estimates Google will command 64% of the tablet OS market in 2018.

As usual, the vast majority of Google's $18.1 billion in 2014's Q4 revenue came from advertising. As the world's leading digital ad medium, Google continues to grow at phenomenal rates -- revenues were up 19% last year compared to 2013 -- despite its size. And its dominant mobile presence is a big reason why. All of those smartphones and tablets running Android, with Google search and assorted properties set as defaults, continue to drive users to its products and services. Just as they will for years to come.

Up and coming
It seems almost laughable now, but it was just a couple of years ago that industry pundits and investors were lamenting the lack of Facebook's mobile presence. It was fairly obvious even then that the world was going mobile, which is why Facebook CEO Mark Zuckerberg made it clear that was going to change. And it has -- in a big way.

Last quarter, mobile made up 69% of Facebook's nearly $4 billion in advertising revenue-- a whopping 53% jump from the year-ago Q4. Another tell-tale sign that Facebook's focus on mobile is hitting its stride is the number of users accessing it via their smartphones or tablets. Facebook boasts a mind-boggling 1.39 billion monthly average users (MAUs), and of those, 1.19 billion are of the mobile variety.

As Facebook prepares to launch its Internet-beaming drones to remote areas of the world, many expect mobile devices will be the primary means of accessing the web for all those new Internet users. And Facebook is clearly ready to deliver its laser-like targeted ads to a whole new group of mobile users, driving growth for years to come and challenging Google as the king of digital ads.

The article High-Return Investments in Mobile Potentially Worth the Risk originally appeared on Fool.com.

Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.