Had you invested 2,000 US dollars in Microsoft shares in 1986, you would have been a millionaire 13 years later.
From an investor point of view the question is:
Which company will do to the Internet of Things what Microsoft did to the software industry in the 80s and 90s? And how can you invest in these Internet of things stocks?
First of all, there are some companies that are almost inevitably going to shape the Internet of Things. Among them are the big IoT influencers like Google, IBM, Apple, or Cisco. To understand how these companies are shaping the Internet of Things, take a look at the Top 20 Internet of Things companies. These companies are pretty obvious, though. And the potential upside in these internet of things stocks might be limited.
Beyond these large corporations there are hundreds of smaller companies and startups shaping the Internet of Things. Those that are publicly listed, are worth considering for your Internet of Things stock portfolio.
Here is a list of 15 companies that have a compelling business case for the Internet of Things, are publicly-listed on the stock market, and are not among the big boys (yet?):
Hardware IoT stocks
Hardware is the basis for every connected device in the Internet of Things. The core parts of hardware are sensors, processors, and communication modules.
1. Invensense
Invensense is one of the leading companies in the field of motion-tracking MEMS sensors, micro-electro-mechanical systems. MEMS are characterized by their extremely small size and low power consumption. Many of these sensors like gyroscopes and accelerometers can be found in smartphones today. MEMS sensors are really made for the Internet of Things.
With the expected explosion of billions of connected devices in the coming years a strong growth of MEMS sensors is very likely.
2. Nordic Semiconductor
The Norwegian semiconductor company Nordic specializes in ultra low-power wireless and connectivity devices for the 2.4 GHz ISM band, with ultra-low power performance and cost being the main focus areas.
In the developer scene Nordic chips are known for their quality and performance – specifically for Bluetooth applications. If the Bluetooth-based iBeacon technology that is currently promoted by Apple takes off, then Nordic is in an excellent position to benefit.
3. CalAmp Corp
Oxnard based CalAmp manufactures routers, gateways and other M2M communication hardware. As GE’s vision of the industrial internet becomes reality, CalAmp is set up to benefit.
The company has built up a compelling Machine-2-Machine communications portfolio for the last 30+ years.
Communications IoT stocks
Connected devices produce exabytes of data. These need to be securely transported to the receivers or some form of (cloud) database.
4. Gemalto n.v.
Originally a digital security company providing software applications and secure personal devices, Holland-based Gemalto is now eying the M2M managed services space. Their reputation for security puts Gemalto in a great position to offer secure communication between machines and cloud applications.
5. Sierra Wireless
Canadian company Sierra Wireless specializes in providing cellular wireless M2M solutions. The company currently holds 34 % of the worldwide M2M embedded wireless modules market. Tesla and Ford use Sierra Wireless modules in their cars. The cities of Prague and London use them for smart lighting around the city.
Software/Systems IoT stocks
A number of connected devices utilize the software/system architecture that has been established in the last years during the “big data wave”. But that is only part of the story. There are some specific developments around the real-time aspect of processing, storage as well as the central device management. The system architecture is therefore being enhanced with new tools.
6. PTC Inc.
PTC is known as a software company in the field of 2D & 3D design software, product lifecycle management (PLM), and service management solutions. In 2014, the company made headlines when it acquired two leading IoT platforms, Axeda and Thingworx. With these acquisitions, PTC is trying to build a powerhouse for the Internet of Things.
7. Software AG
Streaming analytics or real-time analytics is the buzzword to characterize the type of analytics necessary to process IoT data and help uncover real-time insights from devices, sensors, infrastructure, applications and data. Forrester Research recently ranked German company Software AG as the leader in this new and upcoming field.
While Software AG’s legacy business of business process excellence software is currently declining, the company is seeing its future as an enterprise transaction provider with IoT connectivity.
8. LogMeIn
One of the big competitors for PTC in the field of IoT platforms is Boston-based LogMeIn. Their product Xively (formerly known as Cosm and Pachube) seems to have the early lead in the game of IoT platforms.
If Xively continues to hold its lead as the IoT platform of choice, it could become the gateway for billions of connected devices around the world. And with it all of its data and connection characteristics. Almost like a Facebook for things.
9. ENEA
The Swedish company ENEA offers operating system solutions including development tools, network protocols, databases and middleware for connected devices. ENEA claims to be the world’s third-largest player in the emerging field of real-time operating systems.
IoT stocks around business-facing applications
Thanks to companies like GE, the industrial internet is picking up pace. Industrial companies are currently enhancing their product offering as well as their own operations with IoT-enabled solutions. In addition, some companies are specializing in helping build these industrial solutions.
10. Zebra Technologies
One of these companies is Zebra Technologies. At the beginning of 2014, Zebra acquired Motorola’s enterprise device business. Traditionally being a leading company in the barcode and RFID space, Zebra is now refocussing to become an IoT enabler for businesses. The Zatar IoT platform is Zebra’s latest addition to the IoT portfolio.
11. EuroTech
Italian company EuroTech has a similar approach integrating “state-of-the-art computing and communication technologies into innovative business solutions”. One of their lighthouse projects is the development of unmanned electric Personal Rapid Transit (PRT) vehicles at Heathrow Airport in London.
IoT stocks around consumer applications
The two biggest segments in consumer applications are currently Home Automation and Wearables.
12. Control4
In Home Automation, Control4, is an interesting player. Control4 products for home automation (light switches, thermostats, ETC) are designed to be compatible with most other home automation products. In contrast to most of their competitors, their products are based on open-source hardware and IP standards.
13. Lifelogger Technologies
Lifelogger is a lightweight wearable camera that includes sensors and a GPS position. LifeLogger is still an extremely young company. It was named among the top 5 Start-ups at the CES 2014. While the company has so far created more buzz than actual revenues this internet of things stock might be a unique chance for the average investor to get on board really early in the game.
IoT stocks in the wider ecosystem
14. Arrow Electronics
Arrow has been specializing in electronics distribution since the 1930s. Today, Arrow serves over 100,000 original equipment manufacturers, contract manufacturers and other commercial customers. With this exceptional sales network in hand, the company is actively pushing the topic of “Internet of Things” to grab its share in the distribution of the billions of device components.
In December of 2014 and in early 2015, the “Arrow Internet of Things Immersions” conference will be held in three cities in the US.
15. Safeguard Scientifics
Safeguard Scientifics is one of the few publicly traded companies providing capital for entrepreneurial and technology companies in IoT. In December of 2013 Safeguard made headlines when it sold the IoT platform Thingworx for $112m to PTC. Another IoT company in their current portfolio is DriveFactor, a platform for usage-based insurance.
Further information about these 15 Internet of Things stocks
Overview table
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Numbers by Yahoo Finance.
*IoT focus today = Amount of total company business focused on IoT. Estimated based on publicly available information.
Background
The above-mentioned internet of things stocks have been picked due to their suitability for the IoT-conscious investors. We do not recommend any stock over another one.
The criteria for making this list were:
- Companies that have a clear IoT focus with one of their core products and a compelling business case
- Companies that are not obvious because they are either small, outside the US or traditionally from a different domain
- Not more than two stocks from the same IoT subcategory (i.e. platform, sensors, operating system, etc.)
If you are interested in a more complete view of publicly traded IoT companies, take a look at our list of 340+ public IoT companies. This database consists of hundreds of publicly-listed internet of things companies, structured along main technologies and main segments/verticals.
Disclosure
The intent in publishing this article is to inform investors about developments related to specific Internet of Things stocks. The author did not and does not intend to suggest any specific action by any investor or shareholder and strongly suggest that any decision made to buy or sell shares of these stocks be made after consultation with an investment advisor as to the suitability of such an investment. The author currently does not own shares of any of the above-mentioned stocks but may buy or sell shares at any time based on market conditions and the trading prices.
