By now our view of investing in tech stocks should be clear; generally speaking most tech stocks can be divided into one of three categories that offer potential for gain: (1) companies that are in the process of establishing themselves as long term category winners for the next decade or more, (2) companies that have not yet clearly established their long term credentials, but offer a compelling reason to buy or sell them in the short term, and (3) companies that are too new to evaluate using our Smart Tech Rating methodology, but score highly in the ‘Strategy’ component of our Boeckl innogration Quotient (“BiQ”).

While we currently provide coverage of stocks for the first two categories in our Investment and Equity Trades portfolios, respectively, until now we have not made recommendations for the third classification of tech companies.  Today, however, that changes as we are proud to introduce our Next Wave portfolio that will recommend small-cap tech stocks that we believe are well positioned to become leaders in their respective niche markets.

As we described earlier in this issue, the build-out of the information superhighway has created enormous demand for Cloud computing and storage, along with the Big Data analytics that it makes possible. We consider these two sectors to comprise half of what we have dubbed “the utility stocks of the 21^st century”, which along with Mobility and Social are being facilitated by the new horizontal infrastructure that has been created.

Unlike our other two portfolios which use the Smart Tech Rating (STR) as the primary method of evaluating investment merit for each stock, this portfolio will be based on our more subjective opinion of the extent to which a company appears to be executing a viable strategy for capturing significant market share in a niche within one of these categories. In addition, we also do not know exactly how long it may take until a company has matured to the point that our STR methodology will allow us to pinpoint a better defined sense of timing and value.

For both of those reasons we advise readers to be judicious in using these picks to populate their portfolios; own several of them and do not “cherry pick” the one or two you find most compelling, and you should assign an appropriate weighting to this portion of your portfolio that reflects a higher tolerance for volatility. While we would like to believe that all of them will meet our expectations, we know that stocks of this size are subject to a number of risks that cannot be clearly defined or measured.

We will build this portfolio over time, adding stocks as we identify them. Herewith are our first four additions to the new Next Wave portfolio with more details to follow in next week’s edition of Smart Tech 50 Weekly Movers:

Big Data – NICE Systems (NSDQ: NICE) Market cap = $2.7 billion. Facilitates internet security by using data analytics to prevent cybercrime and terrorist activity. Buy up to $50.

Mobility – Silicon Motion Technology Corp (NSDQ: SIMO) Market cap = $558 million. Manufactures mobile storage products for smartphones, tablets/pads, and cameras. Buy up to $22.

Cloud – Ebix Inc. (NSDQ: EBIX) Market cap = $638 million. Provides cloud-based solutions to the insurance industry which facilitate e-commerce by aggregating data that can be used to more accurately measure risk and rate policyholders.  Buy up to $20.

Social – Kongzhong Corp (NSDQ: KONG) Market cap = $512 million. China’s fastest growing online gaming company; it straddles Mobility and Social with a platform of media content, games and interactive entertainment. Buy up to $14.