Can You Profit from the Internet of Things?

Can You Profit from the Internet of Things?

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The internet of things will grow exponentially over five years. Can you capitalize on the trend now?

Emily Adler at Business Insider reports the Internet of Things (IoT) will will grow 374% in the next four years to over nine billion (with a “B”) units implemented per year. That number is greater than all other smart devices (like phones, tablets, wearables and PCs) put together.  

This revolution will not be televised, though it may be built into your TV (and refrigerator, and power grid). The economic effects may also be covert, like a rip tide surprising beach bathers. On one hand, the efficiencies created by the smart web might bring down the cost of commodities. For example, smart electricity grids that make household, office and industrial use more efficient will also bring down energy prices. And smart refrigerators that know just how much juice you consume will make sure you don’t buy food that goes to waste. The effects will be wide spread, and it will create losers as well as winners.

Investment ideas

The future of IoT is diverse. Many companies that cover a variety of sectors are developing products for this breakout technological development.

Home products

The most high profile IoT products are for the home, and Nest Labs, maker of the Nest Learning Thermostat and the Nest Protect smoke detector are the most visible of these products. Google (GOOG) recently bought the company for $3.2 billion, adding to Google already heavy investment in smart and IoT technology.

Philips (PHG), an international manufacturer of consumer lifestyle solutions, partnered with Weight Watchers to make ActiveLink, a biometric device that collects data about the user’s activity levels and provides that data in real time to support the user’s weight loss goals. Their Smart Air Purifier provides families with a real-time overview and control of indoor air quality via smartphone, and their AVENT Smart Baby Monitor connects to and is operated by a smartphone, ensuring parents are never disconnected from their baby.

Office and industrial applications

Cisco Systems (CSCO) founded its reputation by building the internet’s hardware infrastructure. As the IoT infiltrates every niche of the production process, Cisco will connect formerly unconnected devices with an open standard, integrated architecture via the cloud. Their mission is to help business create and analyze formerly unrecognized data points that can productivity and operational efficiency today.

LogMeIn (LOGM) seeks to connect people in business like Cisco connects devices. Its cloud-services are used to connect more Internet-enabled devices, such as smartphones, tablets, PCs, Macs and sensor-enabled devices, and LogMeIn’s remote-access and collaboration services allow non-technical users to access and control remote computers, run applications across different platforms and devices and save data in the cloud.

Smart power grids

The most exciting development in the IoT is the possibility of a “smart grid” that will optimize power use, saving consumers money and possible also saving the planet. Companies like ABB Limited (ABB), Siemens AG (SI) and General Electric (GE) have built out smart grid systems. But smaller players in the sector, like Silver Spring Networks (SSNI), which  develops wireless mesh networks and transmits energy consumption data between meters, consumers and utilities in real time, are positioned to bridge the gap between producers and consumers.

International Business Machines (IBM), once a digital dinosaur, is reinventing itself in this space with grid-improving software and services. Not only is IBM involved in power generation optimization and intelligent plant lifecycle management for energy and utilities, they also produce cyber security solutions for utilities to protect the grid from attack.

Do you think the internet of things (IoT) will drive these stocks upward? Use this list as a starting point for your own analysis.

1. ABB Ltd. (ABB, Earnings, Analysts, Financials): Provides power and automation technologies for utility and industrial customers worldwide. Market cap at $58.6B, most recent closing price at $25.32.
 

 

2. Cisco Systems, Inc. (CSCO, Earnings, Analysts, Financials): Designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. Market cap at $115.04B, most recent closing price at $21.69.
 

 

3. General Electric Company (GE, Earnings, Analysts, Financials): Operates as a technology, service, and finance company worldwide. Market cap at $263.97B, most recent closing price at $25.95.
 

 

4. Google Inc. (GOOG, Earnings, Analysts, Financials): Google is the world's most popular search engine. Market cap at $406.76B, most recent closing price at $1213.0.
 

 

5. International Business Machines Corp. (IBM, Earnings, Analysts, Financials): Provides information technology (IT) products and services worldwide. Market cap at $201.3B, most recent closing price at $187.53.
 

 

6. Koninklijke Philips Electronics NV (PHG, Earnings, Analysts, Financials): Engages in the healthcare, consumer lifestyle, and lighting product businesses worldwide. Market cap at $32.04B, most recent closing price at $34.74.
 

 

7. LogMeIn, Inc. (LOGM, Earnings, Analysts, Financials): Provides on-demand, remote-connectivity solutions to small and medium-sized businesses, information technology (IT) service providers, and consumers in the United States and internationally. Market cap at $1.1B, most recent closing price at $44.74.
 

 

8. Siemens AG (SI, Earnings, Analysts, Financials): Operates in the industry, energy, and healthcare sectors worldwide. Market cap at $109.1B, most recent closing price at $127.80.
 

 

9. Silver Spring Networks, Inc. (SSNI, Earnings, Analysts, Financials): Provides networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. Market cap at $803.78M, most recent closing price at $16.99.
 

 

(List compiled by Will Kenton. Financial information sourced from Zack's Investment Research.)

 

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One Response to “Can You Profit from the Internet of Things?”

  1. I can only imagine what technology will lead us to in the next years to come. This post says that Philips will give its customers that ability to control indoor air quality in their homes through a smartphone. This is just one of the many to look forward to. Pretty exciting!

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