While it's a rarity for any industry to overcome the market's strongest bearish tides, it does happen on occasion. And such an industry is stealthily doing just that right now.
Moreover, given that we've already seen this group's stocks rise - consistently - over the last several weeks while the rest of the market has dipped into the red, I think it's time to once again take a serious look at the wireless names - an arena that didn't really participate very well in the marketwide rally over the last 14 months. My how the tables have turned.

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Group Momentum
They say that what comes around goes around. For the market, that means yesterday's leading sectors become tomorrow's laggards, and yesterday's laggards become tomorrow's leaders - the elementary explanation of sector rotation.

With that in mind, take a look at the S&P 1500 Wireless Telecom Service Index has started to lead after lagging - badly - for so long.

% Return Timeframe S&P 1500 Wireless Telecomm Srvc Industry SPDR S&P 500 ETF Trust
2-Week % Chg 6.51% -1.76%
1-Mth % Chg -1.09% -8.01%
2-Mth % Chg 1.58% -6.58%
3-Mth % Chg 7.93% -1.30%
6-Mth % Chg 6.98% -0.58%
12-Mth % Chg -1.37% 18.12%
As of May 18, 2010

If it were just one or two of the timeframes that we saw the wireless stocks easily outperform the broad market, I might not care. We're starting to see it on a consistent -and persistent - basis though, after they lagged for the better part of 2009.

This looks like real rotation, and could last for months if not years, which is long enough to carve out a spot in your portfolio for the emerging trend anyway.

Ways to Play
Just to be clear, while this is a no-bones-about-it bullish call on wireless telecom stocks, that doesn't include industry giants Verizon (NYSE:VZ) and AT&T (NYSE:T). Both have wireless operations, but both have other ventures that are proving to be as much of a burden as a blessing. And never mind the fact that whole "small cap edge vs. large cap headache" is evident within the wireless space.

Rather, I find myself drawn to names that range anywhere from "not always in the headlines" to "never heard of it"; many of them are foreign wireless stocks.

Take names like Brazil's Telecommunicacies de Sao Paulo S.A. (NYSE:TSP) or Japan's NTT DOCOMO (NYSE:DCM) for instance.

While shares of TELESP have been getting shellacked lately, that hasn't prevented the company from continuing to earn at a healthy pace. The trailing 12-month price/earnings multiple is a mere 7.8; the forward-looking one is 8.2. TELESP has been falling a little (or more than a little) short on forecasted earnings lately, but I suspect analysts now have their bearings, and the company now has a stable customer/prospect base.

Docomo isn't as cheap, with a historical and projected P/E in the 12 range, but DCM does have something not all other wireless stocks have at this point: the ability to resist the bigger bearish tide. Docomo shares are at break-even levels for the last two months, against the market's 8% loss.

Fewer Picks in the United States
There are U.S.-based opportunities too, like MetroPCS Communications (NYSE:PCS). Though it's not rock-bottom priced, PCS shares aren't expensive either. As well, you have to love the consistent rise from the stock over the last four months, shrugging off the selling most other stocks are experiencing night now.

That said, it just seems like foreign wireless carriers, who are dealing with less competition than U.S. service providers, seem to have more attractive numbers.

Bottom Line
You get the idea - the technicals and the fundamentals are lining up for many of these names, and the industry's bullish tide is giving these stock the last nudge they need. Wireless stocks may end up as one of the few hot spots in what's apt to be a tepid summer. (To learn more, check out Dial Up Choice Telecom Stocks.)

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