While technology stocks as a whole are sizzling of late, with the Nasdaq gaining 15% since the start of the year, certain sectors are consistently generating the most buzz. Virtual reality and the Internet of Things are regularly cited as the most prominent technology trends.
The Internet of Things (IoT) — which, in a nutshell, refers to the ability to connect more items to the Internet — especially holds huge potential for its possible business applications.
Indeed, forecasts suggest business-to-business Internet of Things technologies will reach $267 billion by 2020, while the overall IoT market is projected to register a CAGR of 13.2% through 2023. So, how can you invest in the growing IoT market?
Here are three possible stocks to buy.
Tech Stocks to Invest in the Internet of Things: Apple Inc. (AAPL)
At its recent Worldwide Developers Conference, Apple Inc.’s (NASDAQ:AAPL) announcement honed in on both virtual reality and the Internet of Things. With regard to the latter, the HomePod is an Amazon.com, Inc. (NASDAQ:AMZN) Echo competitor that is voice-controlled and also connects to IoT devices.
Of course, that’s just an extension of Apple’s inherent role in the Internet of Things, as smartphones are one of the most common, although now obvious, pieces of hardware now connected to the Internet. Apple also released a watch that can actually sync with gym equipment to measure health data.
One interesting thing to note: Apple is unique in that it’s a direct-to-consumer play on the Internet of Things. As such, there’s much more up in the air about privacy and data security with its IoT devices. While I don’t expect that to hinder the growth potential, investors should keep an ear to the ground as the tech world figures out the security side of the equation.
Tech Stocks to Invest in the Internet of Things: Texas Instruments Incorporated (TXN)
Texas Instruments Incorporated (NASDAQ:TXN) used to be known best for the graphing calculators you (or perhaps your kids) were required to buy for high school math class. In recent years, though, the company has dramatically pivoted, instead focusing on the production of the semiconductors powering the Internet of Things.
In contrast to Apple, this means more industry-specific applications, from “smart cities” to manufacturing applications. In the company’s own words, TXN is “the only semiconductor company with all of the building blocks to enable the IoT.”
Already, the proof is in the pudding for Texas Instruments stock. Shares have gained more than 31% over the course of the last year, while earnings are on tap for double-digit growth in coming years.
Tech Stocks to Invest in the Internet of Things: Cisco Systems, Inc. (CSCO)
A recent forecast noted the following: “40% of today’s IoT customers prefer to use traditional and well-established software companies for their IoT solutions.” Enter Cisco Systems, Inc. (NASDAQ:CSCO) — a tech behemoth to say the least, and one that’s been positioning itself as an Internet of Thing leader for years.
As is the case with TXN, Cisco is a B2B play on the IoT, with a variety of industries on its resume. For example, Cisco has products for everything from smart energy grids to connected education devices.
Also like TXN, projections are for annual earnings growth north of 10% for the next half decade. For the cherry on top, this IoT play sports a 3.64% dividend yield, despite its 16% gain over the last 12 months.
Hilary Kramer is the editor of GameChangers, Breakout Stocks, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.