5 Stocks Ready for Rising Data Demand

NEW YORK (TheStreet) -- Wall Street curmudgeons always offer that "even a broken clock is right two times a day." While the intent is to poke fun at investors who have not performed sound due diligence, the remark does very little to discredit the rewards earned on the trade.

It only takes being right once to become a millionaire investor. Ultimately, being in the right place and at the right time is what counts.

As my research continues to suggest, it is the right time to be in networking giant Cisco , I am also growing more enamored with names such as AT&T and Verizon as their data networks will soon become in higher demand.

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The charts below are the results of a study sponsored by Cisco showing that global mobile data grew by 133% during 2011 -- the fourth year that traffic more than doubled. Even more noteworthy were some of the statistics that went along with the study. To list just a few: monthly global mobile data traffic will surpass 10 exabytes in 2016; smartphone handsets will exceed 50% of mobile data traffic in 2014; the average mobile connection speed will probably surpass 1 megabyte per second in 2014.

So with this understanding, the obvious question is, how can investors capitalize on it?

The charts above offer a blueprint to some significant growth opportunities. Remarkably it seems Wall Street has yet to realize this, otherwise companies such as Cisco, Verizon or AT&T would be trading at significantly higher valuations.

Rivals of these companies should also benefit. These include names such as Hewlett-Packard : Although it has languished of late, the company remains a dominant force within this space. Not only its PC and printing businesses, but its network equipment business is good enough to rival both Cisco and Juniper .

Investors have to also consider the impact that the increased data demand will have on cloud companies such as EMC and Oracle . It stands to reason that their reputation of bringing business efficiency and expertise in the area of "big data" will come at a premium. EMC is far from being discounted -- at current levels it is trading at a multiple higher than a rival such as IBM ). But that just shows how undervalued both Oracle and HP just might really be.

Internet Service Providers

Cloud and network components companies both need a way to function and service the needs of their customers; they need bandwidth provided by the ISP space or wireless carriers, namely AT&T or Verizon. Eventually, the question will have to be answered, who pays for bandwidth? And how should it be divided? As data demand grows, customers will decide fair and unfair in terms payment. Differences in service offerings will become the determining factor.

From that standpoint, AT&T just might be ahead of the curve as it offers what it calls "Synaptic Compute as a Service" along with its VMware vCloud Datacenter Service - a top-of-its-class offering that allows customers access to AT&T's virtualized servers to easily and efficiently alter their capacity as needs dictate. Some of the other features include avoiding procurement delays, reducing CAPEX, speed provisioning and deployment while also responding quickly to business needs.

If that strategy alone is not enticing enough, AT&T also offers one of the best dividend yields on the market at almost 6% -- making it one of the safest stocks now and well into the future.

As with AT&T, Verizon offers one of the fastest mobile networks on the planet. Its 4G LTE network, available in over 196 cities, is considered one of the most advanced services anywhere -- allowing customers to download movies, photos, Apps, games, news and pretty much any content within a matter of seconds. The company is also aggressively expanding the network to cover its existing nationwide 3G infrastructure by the end of 2013.

As far as the cloud is concerned, Verizon, with its recent acquisition Terremark, offers global enterprise-class IT as well as security services by combining advanced IT infrastructure with world-class provisioning and automation capabilities -- one that is reliable and able to scale based on the enterprise needs.

Bottom Line

When it comes to investing, more than anything, being at the right place at the right time is often the difference between a market-beating portfolio and one that simply lags behind. Evidence continues to suggest the right place will eventually be in the increased demand for data, and the right time to invest in these names is now.

As great and as ubiquitous as smartphones are, they will present some challenges not only for the manufacturers but for the carriers that provide the networks to support communication. To be right when it matters, investors should look to names such as AT&T, Verizon, Cisco and cloud players such as Oracle and EMC.

>>To see these stocks in action, visit the 5 Stocks Ready for Rising Data Demand portfolio on Stockpickr.