Tech stocks, including Internet of Things (IoT) stocks, are having a very tough time lately.
Increased market tension is powered by a highly unstable geopolitical environment that has led to a sharp market selloff. However, this environment could offer fertile ground for buying opportunities. Many IoT stocks, which have been beaten down lately, now trade at attractive valuations. They seem well-positioned to keep benefiting from the ongoing trend of “connecting the future.”
For context, IoT stocks refer to companies that produce technology that enables everyday devices to connect to the internet and facilitate communication and data exchange. These technologies range from smart home devices to industrial sensors, making our lives more connected and efficient.
Despite the recent market selloff, I believe that the long-term prospects of IoT stocks remain strong. The rising demand for smart, connected solutions across various sectors should keep powering their growth. In this article, I will present three such IoT stocks that not only trade at rather attractive valuations but also appear to have the potential to be at the forefront of the ongoing IoT revolution. Let’s take a closer look!
Cisco Systems (CSCO)
When discussing IoT stocks, Cisco Systems (NASDAQ:CSCO) is impossible to overlook. It’s a global technology leader renowned for its expertise in networking hardware, software and telecommunications equipment. Cisco Systems is a cornerstone of the IoT space. The company delivers essential infrastructure solutions that ensure secure and efficient connectivity across a multitude of devices and networks that are essential to our daily lives.
Cisco System’s growth has lagged lately, with revenues declining 13% to $12.7 billion in its fiscal Q3 results. This was due to a lag in product orders and inventory adjustments by customers. The company experienced a decline in its largest product category of networking, as customers completed the deployment of previously purchased inventory. Also, this was compounded by muted demand in specific segments and geographical areas.
Despite these challenges, Cisco System’s overall prospects remain strong. The company has been transitioning toward a subscription-based model. In fact, revenue from subscriptions now makes up more than half of its total revenue. Further, the recent acquisition of Splunk is set to enrich CSCO’s offerings and drive future growth. In the meantime, trading at just 12.6 times this year’s expected earnings per share (EPS), I find Cisco stock attractively priced.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is known for its semiconductor and telecom equipment. The company’s technologies support a wide range of IoT applications. That includes advanced automotive systems and smart home devices to industrial automation and wearable technology. For instance, Qualcomm’s Snapdragon processors and 5G modems are integral in enabling high-performance, connected devices across various sectors.
Furthermore, Qualcomm’s growth trajectory remains robust. Revenues are advancing by 11.2% to $9.39 billion in its most recent fiscal Q3 results. The company’s strong order backlog is expected to fuel revenue growth further. And, EPS is projected to increase by 19.1% to a record $10.04 this year. Moreover, Wall Street projects that Qualcomm’s momentum will sustain well over the medium term. Additionally, EPS is projected to grow in double digits at least through 2027.
Given its solid performance and growth prospects, Qualcomm is another IoT stock rather attractively priced at current levels. Currently trading at 15.6 times this year’s EPS despite Wall Street’s aggressive growth projections, Qualcomm presents as a compelling investment opportunity.
Samsara (IOT)
A leading player in the IoT space, Samsara (NYSE:IOT) specializes in fleet management and industrial IoT solutions. The company offers an all-in-one platform that combines hardware, such as GPS trackers and sensors, with cutting-edge software analytics. This system provides real-time monitoring of vehicles, equipment and facilities. And, it allows businesses to enhance operational efficiency, safety and cost management.
I like Samsara due to its competitive edge, which lies in its integrated technology suite and vast data network. This creates significant barriers to entry for potential competitors. By offering a unified solution for fleet and asset management, Samsara essentially makes sure that it remains a leader in this rapidly growing market. This is evident in the company’s explosive growth, driven by an influx of new customer quarter after quarter.
Samsara’s most recent Q1 FY25 results once again illustrated this momentum, with revenue rising by 37% to a record $280.7 million. Wall Street expects continued growth throughout the rest of the year, with FY2025 revenues expected to grow by 29.4% to $1.21 billion and EPS projected to grow by 90.5% to $0.19. Although Samsara’s stock is trading at what seems to be a crazy-high multiple of 265 times this year’s expected EPS, this figure is somewhat misleading, as the company has only now started to scale its bottom line.
On the date of publication, Nikolaos Sismanis did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
