Many businesses are planning to continue, at least in-part, with remote working arrangements even after the pandemic is over given its benefits and the huge investments they made in remote connectivity during the pandemic. This is expected to buoy demand for gadgets that support Internet of Things (IoT) technology. Furthermore, the commercial deployment of 5G technology is expected to create a high demand for secure IoT devices and tech solutions in the coming months. Manufacturing and industrial sectors are also increasingly using IoT technology.
The global IoT market is expected to grow at a 10.5% CAGR over the next five years to reach $1.39 trillion by 2026. Investor optimism about this industry is evident in the Global X Internet of Things Thematic ETF’s (SNSR) 51.2% returns over the past year. This compares to the SPDR S&P 500 Trust ETF’s (SPY) 40.1% gains over this period.
Given this backdrop, we think it’s wise to invest in ABB Ltd (ABB – Get Rating), Skyworks Solutions, Inc. (SWKS – Get Rating) and Qorvo, Inc. (QRVO – Get Rating) because these companies are positioned nicely to benefit from the growing demand for IoT technology.
ABB is a Swiss-based technology company that manufactures and sells electrification, industrial automation, and robotics and motion products to customers in utilities, industry and transport, and infrastructure sectors worldwide.
On May 17, 2021, ABB’s Robotics and Discrete Automation and Absolicon Solar Collector developed a factory in Sweden to automate mass production of concentrated solar collectors. ABB robots enable Absolicon to produce one solar collector panel every six minutes compared to building three per day, making Absolicon’s solar technology a cost competitive alternative to conventional heating. This acceleration in productivity is likely to sustain a long-term partnership with ABB.
ABB won orders from Stadler Rail, a Swiss-based rail vehicle manufacturer, on April 16, to enable energy efficient and sustainable transportation for operators Schleswig-Holstein and Berlin in Germany. ABB’s energy efficient traction converters and high-power lithium-ion-battery-based on-board energy storage systems will be installed on its power trains. ABB is looking forward to having a long-term partnership with Stadler Rail.
The company received orders worth $7.76 billion in its fiscal 2021 first quarter ended March 31, 2021, which increased 5.6% year-over-year. ABB’s total revenue increased 11% year-over-year to $6.90 billion. Its gross profit has been $2.27 billion, up 18.7% from the prior-year period. Its income from operations is reported to be $797 million for the quarter, which represents a 113.7% improvement year-over-year. While its net income increased 33.5% year-over-year to $502 million, its EPS increased 38.9% year-over-year to $0.25.
A $0.33 consensus EPS estimate for the current quarter, ending June 30, 2021, represents a 50% year-over-year improvement. The stock surpassed the consensus EPS estimates in each of the trailing four quarters. The $7.02 billion consensus revenue estimate for the current quarter represents a 14% rise from the prior-year period. Analysts expect ABB’s EPS to grow 14.6% per annum over the next five years. ABB climbed 79.4% over the past year to close yesterday’s trading session at $33.77.
It’s no surprise that ABB has an overall B rating, 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.
The stock has an A grade for Momentum, and a B grade for Growth, Quality and Stability. To see additional POWR Ratings for ABB’s Sentiment and Value, click here.
ABB is ranked #11 of 86 stocks in the A-rated Industrial – Machinery industry.
SWKS designs, develops, manufactures and markets semiconductor products worldwide. The company provides products for use in the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, and wearable markets.
On April 22, 2021, SWKS entered a definitive agreement with Silicon Laboratories Inc. (SLAB), a leading provider of silicon, software and solutions, to acquire SLAB’s Infrastructure & Automotive business in an all-cash asset transaction valued at $2.75 billion. The acquisition encompasses the technology portfolios and related assets of SLAB’s power/isolation, timing and broadcast product lines, which should…
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