The smart home is arguably the most consumer-facing aspect of the highly hyped Internet of Things, which promises to connect billions of machines.
More specifically, a smart home is where home devices and appliances are connected over the internet and, according to Statista, the global smart home market is slated to reach more than $53 billion by 2022.
Already, the promise of the smart home is beginning to be delivered on — both directly to consumers who have smart thermostats, lighting systems, security systems, speakers, home assistants and more, and indirectly to investors betting on the trend.
The publication CE Pro tracks 46 “public companies engaged in the smart home industry,” and last year, they gained 41% compared to a 25% gain for the Dow Jones.
With that upward momentum in mind, let’s take a look at three of the best smart-home stocks for your portfolio.
Smart-Home Stocks to Buy: Control4 (CTRL)
Control 4 (NASDAQ:CTRL) is one of the most direct smart-home plays there is. While many companies and retailers sells individual “smart” devices, Control4 sells a network, which gets installed by professionals and which can connect security, lights, entertainment and other smart home components.
CTRL stock has gained 35% over the last 12 months despite meager 6% year-to-date gains. Shares have almost regained the ugly losses that began last fall, thanks in part to a huge jump after the company’s most recent earnings report.
On top of beating Wall Street’s estimates in each of the last four quarters, earnings are expected to expand by 20% per year long-term on the back of double-digit top-line growth.
Smart-Home Stocks to Buy: Amazon (AMZN)
I know what you’re thinking: Amazon (NASDAQ:AMZN) is on just about every list. Best cloud stocks? Amazon. Best ad plays? Amazon. Best in e-commerce? Amazon. But the company also has its hand in the smart-home through Alexa and its Echo, which is the cherry on top of its bull case.
The Amazon Alexa is the core of Amazon’s focus on the smart home. But it’s not necessarily the device itself that gets me excited—it’s how the company is marketing it.
As CNBC recently reported, Amazon is opening smart-home showrooms through a partnership with Lennar (NYSE:LEN), which now has Wi-Fi certified homes. What does that mean? It means the Wi-Fi is built into the walls and floors!
Talk about smart. I think this is an important step to making customers associate Alexa with smart homes as the trend becomes even more mainstream.
Smart-Home Stocks to Buy: Alphabet (GOOG)
I guess a similar story could be told about Alphabet (NASDAQ:GOOG) in terms of its broad appeal. But it’s still the best stock to round out this list.
Samsung has some decent offerings in its phones and fridges, for instance, but I’m always remiss to recommend over-the-counter stocks. Vodafone (NASDAQ:VOD) has also inked a smart-home partnership with Samsung, but I don’t think that’s enough to reverse its five-year downward slide.
Google’s Nest products, though, are consistently ranked as some of the “best smart-home devices” out there — particularly the Nest security camera and smart thermostat.
With several well-known products in its wheelhouse and 22% long-term growth on tap, consider the smart-home just another reason to believe in the company.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
