The Internet of Things (IoT), while technically made up of physical devices, is a somewhat abstract concept. If the term had been coined today, people would probably just call it artificial intelligence (AI) for gadgets. The IoT is composed of physical objects that use software, sensors and other technology to connect via the internet to other devices with the intention of making them all more useful or efficient. IoT devices can include household objects, industrial tools, vehicles and appliances and are commonly called “smart objects.” The IoT enhances efficiency across industries, making IoT stocks to buy a great area to focus on if you want to diversify your portfolio with long term growth opportunities.
Many household items, from thermostats to ovens are already commonplace in the IoT, but there are more applications for this technology in a wide variety of sectors. IoT is transforming industries like healthcare, transportation and agriculture as well. As more companies leverage IoT to innovate and streamline operations, we see more examples of IoT stocks to buy. Capitalizing on this technological advancement won’t just enhance our future, but could also enhance the profitability of companies who embrace it.
Samsara (IOT)
The first on this list of IoT stocks actually trades under the ticker symbol IOT. Samsara (NYSE:IOT) is a leader in industrial IoT technology and its customers include the world’s largest organizations across construction, transportation, warehousing, field services, manufacturing, retail, logistics and the public sector. Its technology can make huge impacts on efficiency and cost effectiveness for the companies who utilize it. Thanks to Samsara, Summit Materials decreased preventable accidents by 33% and Liberty Energy expects to save $10 million.
Recently, the price of IOT dropped even though Samsara’s Q1 results beat analysts’ expectations. Year-to-date (YTD) the stock is down 6%, but it’s up 12% in the last 12 months. But that is exactly why this is a great time to buy IOT. With the future expected to be bright for Samsara based on their current results and updated expectations, it’s time to buy the dip.
Revenue was up 37.4% year-over-year (YOY) to $280.7 million which beat analyst estimates of $272.4 million. Free cash flow (FCF) came in at $18.61 million, up from -$43.97 million in the previous quarter. These strong results caused Samsara to raise its outlook for the rest of the year. The company now anticipates revenue in the range of $1.209 at the midpoint versus $1.191 billion. Earnings per share (EPS) should come in between 13 cents and 15 cents, up from a previous estimate of 11 cents to 13 cents.
Johnson Controls (JCI)
In 2020, Johnson Controls (NYSE:JCI) was named “Overall IoT Company of the Year” from IoT Breakthrough, a leading market intelligence organization. JCI is up over 65% since then and, though it remained relatively flat over the last 12 months, it is now up 18% YTD. Johnson Controls is a multinational company that produces fire, HVAC and security equipment for buildings.
It specializes in intelligent buildings and sustainable energy solutions. The latter will become even more important as the interest in air conditioning surges as global temperatures continue to rise. Johnson Controls holds a unique position within the heating, ventilation and air conditioning (HVAC) industry, and that sector is experiencing high growth driven by energy efficiency and data center cooling demand. Experts project a 7.4% annual increase in global air conditioning spending through 2030.
JCI stock currently looks undervalued. It also offers a 2.18% annual dividend and has consistently increased its dividend over the past decade, making it a great option for income investors who want to put money into IoT stocks.
Cisco (CSCO)
A well known name since the 90s, Cisco Systems (NASDAQ:CSCO), had a somewhat fraught past five years, down 13% in that time. But new plans at the company may put it on the precipice of a turnaround. Tipranks believes there could be a 15% upside, and if the high end estimate of $70 holds true, CSCO could soon be trading close to an all time high it hasn’t seen since 2000.
Cisco is branching out into AI, making a strategic $1 billion dollar investment in AI startups like Cohere, Mistral AI and Scale AI. It is also developing its ThousandEyes system designed to enhance internet functionality by helping traffic find the smoothest and fastest paths between users and servers. Additionally, Cisco is expanding its business into the electric vehicle (EV) sector in China. China’s EV market is experiencing rapid growth, and Cisco actively partners with more than 10 electric car companies, providing technology and infrastructure as they build factories, offices and research and development centers.
With all these new undertakings, plus other plans in the pipeline, Cisco deserves much more investor love than it’s getting currently. With a 3.36% annual dividend and great growth potential, CSCO looks like a strong IoT stock pick for both income and growth investors.
On the date of publication, Philippa Main 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.
