In this article, we take a look at the 14 Best Internet of Things Stocks To Buy Now. If you are in a hurry, you can click to skip ahead to the 5 Best Internet of Things Stocks To Buy Now.
The internet of things is defined as tangible objects that contain software that aims to achieve interconnection of everyday objects via the internet. This includes smartphones, autonomous vehicles, etc. Please also see 12 Best Autonomous Vehicle Stocks to Buy Now.
Ha Nguyen, a vice president at McRock Capital, a Canadian venture capital firm specializing in industrial IoT mentioned,
The International Data Corporation estimates that total spending on consumer and industrial IoT technology and services will surpass $1 trillion by 2022, growing at a double-digit rate.
Although the industry has not been around for very long, it has continuously proven its importance in the economy. In a report from Digitalist, by 2025, the IoT’s economic impact could reach $11 trillion, or 11% of global economic value.
With evident importance to the economy, the internet of things industry continues to grow in market size as well. In a forecast done by Statista, the global IoT market will grow to $1.6 trillion by 2025. The report also showed that 5G technology alone will power 1.3 billion mobile IoT devices by 2023 contributing to IoT’s network.
Many technological solutions have been the answers to keeping the economy afloat during the COVID-19 pandemic. The internet of things was able to link devices and applications that helped lower the possible risk of spreading the virus providing proper monitor systems for high-risk patients. Not only was it beneficial for the medical workforce, but it also allowed work from home to be possible by providing collaborative tools such as cloud computing and remote computer access.
In order to identify the 14 Best Internet of Things Stocks To Buy Now, we started with the 47 holdings in the Global X Internet of Things ETF (SNSR) as of December 29, 2020, and we were able to narrow down our list to 14 stocks by using our hedge fund sentiment scores. As we go along the list, you will notice the STMICROELECTRONICS NV and ADVANTECH CO LTD are the top 2 picks of the Global X's ETF but since they are not listed in the US markets, we couldn't include them in our rankings as hedge fund sentiment data only covers the US stocks.
So why did we use the sentiment scores of hedge funds as the key criteria to assess the best stocks of autonomous vehicles to buy for 2021? Our in-house analysis shows that we can use the sentiment information gathered from the hedge fund filings to classify in advance a select group of stocks that can beat the S&P 500 index by double digits annually on average. For instance, the portfolio of our monthly newsletter's stock picks has beaten the market by over 88 percentage points since March 2017 (see the details here). Some of the portfolio holdings of our monthly newsletter have been shared online too. In October, we shared this real estate stock and since then, it's been up more than 50 percent.
Based on our hedge fund sentiment data, we present to you, the 14 Best Internet of Things Stocks To Buy Now, among the 800+ hedge funds tracked by Insider Monkey:
14. Garmin LTD (NASDAQ:GRMN)
No of HFs: 32
Total Value of HF Holdings: $515 Million
We start the list of the best internet of things stocks to buy now with Garmin. The company delivers critical, real-time information to users allowing them to become more productive every day. This includes GPS, marine, fitness, tracking, and mobile apps. They recently announced its Federal Aviation Administration Supplemental Type Certification for the GCF 500 Autopilot. The GCF Autopilot is intended for light piston aircraft while delivering superior inflight characteristics.
The top hedge fund holder of this stock is Cliff Asness’ AQR Capital Management, which had over $158 million invested in the stock at the end of September.
13. Ambarella, Inc. (NASDAQ:AMBA)
No of HFs: 34
Total Value of HF Holdings: $191 Million
Ambarella, Inc. is a fabless semiconductor design company that focuses on a wide variety of human and computer vision applications. The chips are built to provide a combination of low-power operation video compression, image processing, and computer vision performance.
The top hedge fund holder of this stock is Jim Simons’ Renaissance Technologies, which had $62 million invested in the stock at the end of September.
12. Emerson Electric Co. (NYSE:EMR)
No of HFs: 36
Total Value of HF Holdings: $467 Million
EMR ranks 12th in our list of the best internet of things stocks to buy now. Emerson Electric Co. designs and produces electronic and electrical equipment, software and systems. The company is listed as one of the Fortune 500 companies and ranked among the 100 Best Managed Companies by IndustryWeek magazine.
In an article, Fiduciary Management mentioned that the company’s balance sheet is positioned very conservatively,
“Emerson Electric offers a wide range of products and services primarily in the areas of Automation, HVAC & Refrigeration, and Construction. The company is comprised of Automation Solutions, Climate Technologies, and Tools & Home Products. Emerson has market-leading positions thanks to their domain knowledge, innovation (differentiated technology), and services & solutions capability to address complex challenges in critical markets. Automation Solutions enable customers to maximize production while reducing costs, and Climate Technologies improves energy efficiency, enhances comfort, and protects food quality. Although a cyclical company, nearly 40% of total sales come from the maintenance, repair and optimization portion of Automation Solutions (significant installed base). The replacement nature of Climate Technologies also helps this part of the business be less cyclical in a downturn. In addition to contingency plans in the current economic environment, the company’s balance sheet is positioned very conservatively (strong investment-grade credit) and they have plenty of liquidity. With a compelling valuation, we feel that Emerson is an attractive investment opportunity over our time horizon.”
11. Sensata Technologies Holding Plc (NYSE:ST)
No of HFs: 37
Total Value of HF Holdings: $1.46 Billion
ST ranks 11th in our list of the best IoT stocks to buy now. Sensata Technologies is one of the world’s leading suppliers of sensing, electrical protection, and power management solutions. The company markets battery protectors, circuit breakers, and alike.
Recently the company appointed Daniel L. Black, a managing partner at the Wicks Group as one of their Board of Directors. Andrew Teich, Chairman of the Board mentioned that Daniel’s experience is critical to their operations and strategy,
“Daniel brings decades of experience in key areas critical to our future operations and strategy, such as global experience in finance, mergers & acquisitions, and corporate governance. Daniel’s addition further augments our board's skills and expertise, and we are confident he will provide valuable perspectives as we continue to execute our long-term strategy of enhancing shareholder value. We look forward to his contributions.”
10. PTC, Inc. (NASDAQ:PTC)
No of HFs: 39
Total Value of HF Holdings: $1.34 Billion
PTC, Inc. is an American computer software and services company that focuses on technology used to connect products to the internet for purposes of capturing and analyzing information. During the third quarter of 2020, the company reported a revenue of $352 million.
The top hedge fund holder of this stock is David S. Winter and David J. Millstone’s 40 North Management, which had $372 million invested in the stock at the end of September.
9. International Business Machines Corp. (NYSE:IBM)
No of HFs: 40
Total Value of HF Holdings: $639 Million
IBM ranks 9th in our list of the best internet of things stocks to buy now. International Business Machines Corp. is an American multinational company considered as one of the leading cloud platform and solutions companies in the world. During the third quarter of 2020, the company reported a revenue of $17.56 billion.
We shared a detailed bullish thesis on IBM in this article. Distillate Capital doesn't agree with the thesis we shared and expressed its bearish views in this article:
“AT&T and IBM exited the portfolio as they no longer met the quality criteria for inclusion with AT&T exceeding the debt limit and IBM falling out due to deteriorating long-term fundamental stability.
8. Honeywell International (NYSE:HON)
No of HFs: 41
Total Value of HF Holdings: $970 Million
Honeywell International is a worldwide technology and manufacturing company that is featured as the 92nd in 2019 at the Fortune 100.
In article, we mentioned Amana Mutual Funds’ comments on the stock.
“Honeywell engaged in corporate restructuring last year, slimming the company to a focus on aerospace, building technologies, performance materials, and safety solutions.”
In a separate article, we also shared Fiduciary Management’s comments on the stock.
“Honeywell has established market-leading positions in innovative technologies. They have an excellent service and support network, with a large installed base of equipment. This installed base is mission-critical and creates aftermarket sales opportunities. The ROIC is greater than 20%. The company has a strong and deep management bench and an excellent corporate culture. Honeywell is conservatively-run from a business, accounting, and balance sheet perspective. With exposure to Aerospace (45% of profit) and Oil & Gas (15-20% of profit), the stock came under recent pressure. Within Aerospace, commercial aftermarket, defense, and commercial original equipment account for 16%, 14%, and 8% of total company sales, respectively, the latter of which includes business jets and general aviation. Oil & Gas has proven to be resilient as it is predominantly mid/downstream, with the upstream accounting for just 2-3% of total sales. The company has a strong balance sheet. The stock trades at a mid-teens free cash flow multiple.”
7. Rockwell Automation, Inc. (NYSE:ROK)
No of HFs: 44
Total Value of HF Holdings: $521 Million
ROK ranks 7th in our list of the best internet of things stocks to buy now. Rockwell Automation, Inc. is a manufacturer of automation and information technology. The company markets products such as control systems, motor control devices, sensors, and industrial control panels.
In an article, Amana Mutual Funds made comments on some stocks and ROK was one of them.
“As its name implies, Rockwell has significant exposure to industrial automation, an arena that should provide a steadily growing market over the coming years.”
6. Skyworks Solutions, Inc. (NASDAQ:SWKS)
No of HFs: 50
Total Value of HF Holdings: $886 Million
Skyworks Solutions, Inc. has been in the industry since 2002. The company provides semiconductors for use in radio frequency and mobile communications. During the third quarter of 2020, the company reported a revenue of $737 million, which was $47 million higher than the midpoint of the guidance coming into Q3.
Check out this article where Mott Capital mentioned that the company could be a big winner in the roll-out of 5G.
“Skyworks (SWKS) increased by over 50% in the fourth quarter and by over 80% for the year. The stock of the Apple supplier jumped higher in October on news that the Apple iPhone 11 was selling better than expected. Additionally, investors have started to focus on the release of the fifth generation of wireless technology, 5G. Skyworks could be a big winner in the roll-out of 5G, and the handset upgrade cycle that comes with the innovative technology.”
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