We are moving toward a future in which everything that can be fixed with software, sensors, and data monitors, will be. This idea is referred to as the Internet of Things, or IoT. Naturally, many investors are interested in IoT stocks due to the growth potential in companies related to this field.
The global IoT market is expected to grow by 19% in 2023. That figure accounts for lowered expectations as economic worries factor heavily. However, experts also predict a doubling of the 2023 IoT market by 2027.
The opportunity is clearly massive, leading to curiosity regarding leading firms in the space. Let’s look at a few of the more prominent IoT stocks investors should be watching.
| SWKS | Skyworks Solutions | $102.14 |
| HON | Honeywell | $196.22 |
| JCI | Johnson Controls | $58.51 |
Skyworks Solutions (SWKS)
First on this list of IoT stocks to buy really isn’t an internet of things company at all. Skyworks Solutions (NASDAQ:SWKS) is broadly known as a semiconductor stock. The company manufactures a number of products with technical names. However, it is, in essence, an IoT-heavy chip company.
The company’s website is full of messaging all related to IoT technology and growth opportunity. Indeed, Skyworks appears to be heavily involved in this space. The company serves firms that produce connected devices, explicitly aiming to capitalize on 5G and IoT opportunities.
Notably, Skyworks Solutions sells multiple front-end modules across connected home, industrial, medical, smart energy, and wearables end markets. The company’s cellular architecture serves to connect all of the data its sensors gather.
It’s clear that the company is at the forefront of the IoT sector. Of course, that alone doesn’t make it investment worthy. However, there are a lot of reasons to believe it is worthy of investor capital. Currently, I think SWKS stock is severely undervalued, looking at the company’s price-to-earnings ratio, for one. Indeed, given the company’s strong growth, profitability, and excellent valuation, it’s an IoT stock worth buying here.
Honeywell (HON)
In discussing Honeywell (NASDAQ:HON) stock, let’s begin with its recent earnings report released April 27. Those results were very strong, with the company beating guidance across the board on all metrics. That strong performance led management to raise full-year guidance for sales, adjusted earnings per share, and segment margins.
Sales increased by 6% to $8.9 billion with especially strong earnings per share of $2.07, which were 11 cents above the high end of the analyst range. Importantly, demand at Honewell remains very strong with a $30.3 billion backlog. The company has customers lining up out the door.
Honeywell’s building technologies and performance materials and technologies business lines performed well. Both have a strong presence in IoT. Its safety business was the sole declining segment, but its sensing sub-business performed well within that segment. That is a clear indicator that IoT growth will remain important for the firm.
Honeywell Aerospace performed particularly well as commercial airline demand was strong in the period.
Johnson Controls (JCI)
Johnson Controls (NYSE:JCI) stock offers a lot of upside to investors currently. Currently, JCI stock offers approximately 23% upside based on its consensus analyst target price and dividends, assuming an investor holds it for a year or more.
Johnson Controls is one of the leading firms in IoT and, according to the company, has been engaged in IoT work for two to three decades. Johnson Controls has been connecting systems and products for analytical purposes for decades. One example is the company’s Smart Connected Chillers products. These monitor analytics related to cooling systems that are responsible for as much as half of building energy use. But Johnson Controls’ IoT products span a much broader range of solutions including HVAC, security, industrial refrigeration, digital solutions, and energy, to name a few.
The stock benefits from a strong revenue growth rate over the past 3-year period. That’s among several strong metrics that favor JCI stock as an investment. Accordingly, it’s also a pretty stable stock to invest in while gaining exposure to the long-term growth IoT should provide.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
