There is much discussion about which technologies will emerge as particularly popular in the new year and beyond. Most tech experts agree 2021 is the year of the Internet of Things, commonly referred to as IoT.
The challenge lies in identifying the best IoT stocks for 2021 and moving forward. Check out the IoT investing landscape, and you will find no shortage of options. IoT stocks are quite popular, yet even more publicly-traded companies entering this space will garner significant attention in the months ahead.
Below, we shine the spotlight on three particularly intriguing IoT stocks worthy of a place in your portfolio for 2021: Analog Devices (ADI), Alarm.com Holdings (ALRM), and Synaptics Incorporated (SYNA).
Analog Devices (ADI)
The circuits used in computers and other electronics are central to the functionality of these devices. ADI designs and markets such signal processing integrated circuits. In short, ADI’s technological components are key to the operation and ease of use of IoT devices. The company’s signal processing technology facilitates the development of IoT products used by businesses and consumers. These circuits process everything from light to sound, motion, and other inputs.
The POWR Ratings show ADI has “A” grades in the Industry Rank, Trade Grade, Peer Grade, and Buy & Hold Grade components. ADI is ranked 8th out of 86 publicly traded companies in the Semiconductor & Wireless Chip industry.
Of the dozen or so analysts who cover ADI, every single one views the stock as a “Buy,” with an average price target of $143.15, indicating a possible 4% upside. Furthermore, ADI has a forward P/E ratio of 24, meaning it is likely a bit underpriced at its current trading level of $138.
Alarm.com Holdings (ALRM)
Few people are aware of the fact that ALRM has grown into a multi-billion dollar business. Though ALRM is still fairly small in size compared to the tech giants, it is rapidly growing and has significant potential as we quickly segue to a tech-centric future. ALRM provides a cloud platform for managing both business and home-connected alarm systems, thermostats, locks, lights, cameras, and more. The best part is each of these components can be managed on the web. Nearly 10,000 service providers work with the company.
All in all, ALRM has nearly seven million subscribers. The company’s revenue was up almost 20% this past year alone, exceeding the $500 million benchmark. The icing on the cake is the fact that ALRM is in the black. If the worldwide smart security market expands by $21 billion by 2022, ALRM’s sales may spike by 25% or more each year.
The only question is whether small businesses will be interested in ALRM’s security system after a potentially financially devastating pandemic. If ALRM can pivot toward the consumer market and not skip a beat, the company will excel, moving into the new year.
ALRM has “A” POWR Ratings grades in the Industry Rank and Trade Grade components. ALRM is ranked in the top 30 of nearly 70 publicly traded companies in the Home Improvement & Goods industry. Of the half dozen analysts who cover the stock, five have it as a “Buy” while only one considers it a “Hold,” and none view it as a “Sell.”
Synaptics Incorporated (SYNA)
SYNA is making life easier for both people and businesses, providing helpful interface solutions that facilitate interactions through mobile computing, electronic devices, and entertainment. The POWR Ratings reveal SYNA has “B” grades in each component. The stock is ranked in the top 10 out of 38 in the Technology – Electronics industry.
Analysts who cover SYNA, have set an average price target of $109.60, indicating a potential 40% upside. Add in the fact that SYNA has a forward P/E ratio of 11.58, and you have all the more reason to invest in this undervalued IoT superstar in the making.
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ADI shares fell $0.91 (-0.66%) in premarket trading Tuesday. Year-to-date, ADI has gained 17.22%, versus a 13.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More…