Two Stocks to Buy Now to Profit from the $50 Billion Big Data Industry

When looking for the best technology stocks to buy, Money Morning's Defense & Tech Specialist Michael A. Robinson has a strategy for where to start.

"Ride the unstoppable trends," Robinson said. "That's a rule that's vital if you really intend to amass meaningful wealth."

stocks to buyWhen investors identify burgeoning markets - the industries with explosive growth - they can buy shares of companies at an affordable price and watch the stock soar to record highs. It's like buying Apple (Nasdaq: AAPL) stock 20 years ago.

And when it comes to innovative industries about to hit a growth spurt, Big Data is among the biggest.

"Big Data is the 'answer' to the question: How do we make sense out of the overwhelming amount of data we're generating in the Information Age?" Robinson said. "Big Data is a field in which computers crunch through massive amounts of unstructured data to look for things like online fraud or to make strategic predictions about market growth."

To see how Big Data fits into Robinson's "unstoppable trends" category, just look at its incredible rate of growth.

"Analysts note that 90% of the data we work with was created in just the last two years alone," Robinson said. "Forecasts call for this sector to grow tenfold over a five-year period, growing to roughly $50 billion by 2016."

The amount of data created daily is astonishing.

According to IBM, more than 2.5 exabytes (1 billion gigabytes) of data were created every day in 2012. Every day, more than 294 billion emails are sent and 1 billion Google searches are completed. There are trillions of operational sensors all over the world that communicate with each other, creating data with every message.

Facebook Inc. (Nasdaq: FB) alone has more than 30 petabytes (1 million gigabytes) of data. By 2020, IBM expects there to be more than 10 billion mobile devices operating globally, all creating countless amounts of data.

There's no slowing the Big Data industry, and for investors, that means there are profit opportunities if you know where to look.

Here are two Big Data companies that are on our "stocks to buy" list...

Two Big Data Stocks to Buy Now

Big Data Stocks to Buy: International Business Machines Corp. (NYSE: IBM) may not seem like a "hot" tech stock, but the computing giant has been shedding its reliance on hardware for the past decade.

IBM sold its PC business to Lenovo Group Ltd. (OTCMKTS ADR: LNVGY) in 2005 and sold its low-end server unit to Lenovo in 2014 for $2.3 billion. That's good news for investors who watched the company's systems and technology division (which includes hardware) drop by 23% in the first quarter.

But while lackluster hardware sales weighed the company down, Big Data could be the company's next huge revenue generator.

"It seems like a natural fit," Robinson said. "IBM pioneered data management during World War II and is looking at a huge market. IDC, a data analysis company, says Big Data and related analytics were largely responsible for the software industry's 4.5% growth last year to $369 billion."

"Thus, new CEO Virginia Rometty has a clear mission: turn IBM into a Big Data powerhouse," Robinson said.

IBM stock has gained 7% in the last three months, and according to Robinson, it has room to run.

Big Data Stocks to Buy: CoreLogic Inc. (NYSE: CLGX) has found a way to use data gathering and analysis technology to help landlords with an everyday task. It created a tenant-qualifying technology called SafeRent.

"It's an advanced computer modeling platform that helps landlords screen prospective tenants based on a comprehensive database that replaces hunches and simple credit checks with statistically valid data," said Robinson.

SafeRent takes raw, uncategorized data including criminal records, credit scores, and anything else involved in a background check, and produces an actionable analysis for landlords. The company's database currently has more than 3.3 billion records in the United States, Australia, and New Zealand.

In 2013, CLGX reported revenue of $3.3 billion, which was an almost 8% increase from the year before. Its net income was up 43% to $130.2 million. In the last three years, the company has grown earnings per share at a more than 60% rate.

CLGX stock is up 2.5% in the last 12 months, despite the fact that it has sold off about 20% in 2014. At $28.25, CLGX is trading at discounted prices, considering its position in the growing Big Data market.

Are any Big Data stocks on your stocks to buy list? Join the conversation on Twitter @moneymorning using #BigData.

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