Rapid digital transformation in the past few years has spurred the growth of the Internet of Things (IoT). One of the hottest and fastest-growing segments in the tech space today, IoT encompasses a wide array of devices, data sharing and connectivity. Most everyday electrical devices, i.e., lights, clocks, cameras, computers, doorbells, etc., that connect through the internet fall within the scope of IoT.
The expansion of IoT has been one of the biggest driving forces of the 5G wireless technology. This sector is poised for massive expansion and companies in this space are gearing up to capitalize on this potential market growth.
According to Mordor Intelligence, the global IoT market is expected to grow at a CAGR of 10.53% to $1.4 billion by 2026. Advanced data analytics, affordable connected devices, and increased adoption of cloud computing are the major factors at play in driving this growth.
Picking IoT stocks demands a lot more research, however, because the industry is still fragmented and comprises a mix of players, some of which are pure-play stocks while others are big tech companies with limited exposure to IoT.
We believe Analog Devices, Inc. (ADI – Get Rating), Broadcom Inc. (AVGO – Get Rating), PTC Inc. (PTC – Get Rating), and Alarm.com Holdings, Inc. (ALRM – Get Rating) are four IoT stocks that are well-positioned to gain significantly in the coming months.
ADI is involved in the designing, manufacturing, testing, and selling of integrated circuits (ICs), software and subsystems that employ analog, mixed-signal and digital signal processing technologies. ADI has a major presence in the IoT chemical sensor market.
ADI’s revenue during the quarter ended January 31, 2021 climbed 20% year-over-year to $1.6 billion, led by record revenue in its industrial segment. Its EPS for the quarter climbed to $1.04 from $0.55 posted in the same period last year. President and CEO of ADI, Vincent Roche, stated, “We are confident that a broad-based recovery is underway given continued momentum in ADI’s bookings and lean inventories across the industry.”
Analysts expect ADI’s revenue for the year ending April 30, 2021 to be $1.6 billion, representing a 20.8% year-over-year decline. Its EPS for the quarter is expected to climb 34.3% to $1.45.
ADI surged 66.1% over the past year to close Friday’s trading session at $149.54. Over the past six months, the stock climbed 31.4%.
It’s no surprise that ADI has an overall rating of B, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
ADI also has a Momentum and Quality ratings of B. Of the 99 stocks in the B-rated Semiconductor & Wireless Chip industry, it is ranked #33.
In addition to the POWR Rating grades I’ve just highlighted, you can see the ADI ratings for Stability, Growth, Value, and Sentiment here.
AVGO has dabbled in the IoT space since its early days. The company’s wireless chips were associated with Zigbee standards, which featured in many home devices. Over the years, AVGO has transitioned from wireless IoT to security in the form of Commercial IoT subsequent to its merger with Symantec Enterprise Security in 2019. AVGO now offers critical system protection from cybersecurity threats to IoT.
During the first quarter, ended January 31, 2021, AVGO’s revenue…
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