Credit: Shutterstock photoThe Internet of Things (IoT) will usher in amazing changes in the way we live our lives, how society is structured and the economic basis of it all. It's time investors wake up to the reality of IoT and cash in on this upcoming revolution.
When Imagination Turns Real
Consider a situation when you are already in your car, off to office and still can make the entire security check of your home, close your garage door, make sure that all the lights and electrical devices are off in the house through just a tap of your phone instead of being there physically.
According to an article by home automation maker Control4 Corporation CTRL , the day is not far away when its fitness app will check in with the smart refrigerator and send some healthy dinner recommendations to the users' email based on their daily calorie goals and what's in the fridge. This is precisely what IoT is going to do for you.
IoT- the Next Tech Revolution
"Never mind the 'things,' it's the data they create which is vital." - Jamie Carter
It's all about a huge, continuous stream of data and its storage. From a technological perspective, the most important thing is to receive events from IoT-connected devices. This can happen through Wi-Fi, Bluetooth or any other technology. According to a report in datainformation.com, while Hadoop and Hive are used to store big data, NoSQL document databases like Apache CouchDB are more suitable for IoT data.
Leading information technology research and advisory company Gartner IT estimates that IoT will have 26 billion units installed by 2020. And, by that time, IoT product and service suppliers will generate incremental revenue exceeding $300 billion, mostly in services. So, in less than five years, we can expect our lives being significantly controlled by IoT.
IoT Endeavors from Tech Giants
Undoubtedly, the rise of cloud platforms, phones, phablets, tablets and other smart devices as well as apps has made acceptance of IoT easier among the masses. Firstpost.com puts the turning point of IoT to when Google GOOGL decided to enter our daily lives and be a part of our day to day routines via Android in 2011.
Another turn came when Google acquired Nest labs, the maker of Thermostat, security cameras and smoke detectors. The world is now waiting for the company's launch of the new low power IoT operating system, Brillo, which is designed to run on and connect multiple devices from a washing machine to a rubbish bin and link in with existing Google technologies.
Google's arch-rival Apple AAPL is not far behind with its home automation platform HomeKit (launched in 2014) to control and monitor third-party gadgets. This device awaits its first shipment in retail later in 2015.
On the other hand, the growth in connectivity and data could mean a huge opportunity for wireless communication stocks like Cisco Systems, Inc. CSCO to meet the burgeoning demand for smart devices.
IoT - Beyond Tech
Will the big shot techies be the only ones to have the trump card of the IoT revolution? According to a Fortune report, "It's not just going to be a technology investment thing, it'll be a productivity movement that will drive the entire economy."
Nest Lab has already announced a set of new wide-ranging partnerships whose devices could be controlled through the Nest app. These include August Smart Lock, Philips Hue lights, LG smart appliances and the Withings Aura sleep system among many others.
Several brands like Lockitron and Goji are famous for their smart door locks, while Belkin's WeMo app connects smartphones with coffeemakers and lamps. There is also a huge scope for IoT in modern medical practices. It will give healthcare practitioners instant access to patients' information which is stored through IoT.
3 Non-Tech Stocks to Bet On
We have zeroed in on three such stocks that are not of so called tech companies, but have shown early signs of tremendous growth leveraging IoT market opportunities. These stocks also hold Zacks Rank #1 (Strong Buy) or #2 (Buy) - which increases the chance of their outperformance.
Koninklijke Philips N.V.PHG
This electronic giant has revolutionized the concept of a smart home with the introduction of the world's first Internet connected home lightning Philips Hue. Its portfolio includes portable lamps Philips Hue Go, dual-lighted lamps Philips Hue Beyond, control devices Philips Hue tap and so on. In line with its effort to progress with IoT, the company formed an alliance with cellular wireless M2M solution company Sierra Wireless last year for embed wireless modules.
Carrying a Zacks Rank #2 (Buy) this stock has a stupendous 433.93% EPS growth rate for the current fiscal year. Its long-term expected EPS growth rate is pegged at 8.08% versus 6.85% for the industry.
Amazon.com Inc.AMZN
Any IoT discussion is incomplete without the mention of this e-commerce giant. Amazon's home WiFi-connected product buttons, Dash, has defined an all new era of smart buying. Under this system, families running out of their day-to-day grocery items can easily inform the company just by hitting the button.
Amazon has raised a formidable 77.7% in the last two years and its Zacks Rank #1 (Strong Buy) implies that the stock still has huge upside potential. The expected earnings growth of 392.7% for the current year compares favorably with the industry average of a mere 17.6%. Projected sales growth is pegged at 18.92% for the current year compared with 10.34% for the industry.
Control4 Corporation
Over more than a decade, leading home automation player Control4 has been working successfully in the smart home niche. Its popular smart home products include thermostats, lights, appliances, locks, garage doors, blinds, sprinkler systems, pools and spas, fans and fireplaces which are designed to be compatible with most home automation applications.
This Zacks Rank #2 company's projected sales growth (for the current fiscal) is impressive at 14%. Moreover, positive earnings estimate revisions over the last two months should be reflected in its stock price.
Bottom Line
While the entire focus of the market will be on the progress of mainstream tech giants and you might not get a good entry point to their stock as a result, betting on other stocks connected with IoT may give you handsome returns. The companies we suggested for your consideration have smartly evolved their products in sync with the IoT world.
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AMAZON.COM INC (AMZN): Free Stock Analysis Report
APPLE INC (AAPL): Free Stock Analysis Report
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
KONINKLIJKE PHL (PHG): Free Stock Analysis Report
GARTNER INC -A (IT): Free Stock Analysis Report
CONTROL4 CORP (CTRL): Free Stock Analysis Report
GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
