IoT’s benefit lies in its capacity to enhance convenience, efficiency and safety across various domains. IoT enables real-time monitoring and data exchange by connecting everyday objects to the internet, empowering users with valuable insights and automated responses. Whether receiving timely alerts about low gas levels during travel or optimizing industrial processes for cost savings, IoT’s impact spans from personal convenience to transformative business applications. This promises a future where interconnected devices streamline tasks and improve decision-making. IoT stocks have immense future potential in our ever-growing digital society; getting in now spells high profitability for your portfolio.
Another reason you should invest in IoT is that the economy is strong, meaning technological innovation will continue, so investing in tech is a smart choice. These IoT stocks are all solid buys, currently flying under Wall Street’s radar, with untapped profit and growth potential. This is your chance to get in at a discount before the Wall Street whales.
Cisco (CSCO)
Cisco (NASDAQ:CSCO) provides internet connectivity devices. The stock is currently trading at $46.79 and has a 12-month median price target of $53.00, representing a 12.81% upside.
In Q2 2024, the enterprise market slowed as consumers exhibited weak demand. This caused Cisco’s financial results to fall. The company saw an adjusted EPS of $0.87 and revenue of $12.8 billion, which respectively fell 1% and 6% YOY. However, despite not recording financial growth, the company still beat analysts’ expectations, proving its resilience amid weak demand. The company is also highly profitable, boasting a levered FCF margin of 24.03%, compared to the sector median of 9.52%. Furthermore, the drag on the enterprise market is not expected to affect Cisco’s performance in the long term. In 2025, increasing investments from cloud-computing giants will push the global enterprise market to grow at a CAGR of 11.5%.
The largest catalyst behind Cisco’s growth is its recently completed acquisition of Splunk, an AI-enabled data security company. In addition to boosting Cisco’s non-GAAP EPS, the Splunk acquisition is expected to supercharge the networking giant’s product offerings. By integrating AI-focused features into Cisco’s market-leading solutions, the Splunk buyout significantly enhances Cisco’s value and brings improved products to its customers.
With the Splunk deal finalized, expect this option among IoT stocks to skyrocket as macro pressures ease.
Alarm.com (ALRM)
Alarm.com (NASDAQ:ALRM) offers IoT solutions to manage connected homes and businesses. It mainly provides a cloud-based software platform to control internet-enabled devices, such as security cameras, lights and thermostats. Its stock has climbed 41% in the past year, and analysts believe it still has growth potential. Nine analysts have a median price target of $82.60, representing a 24% increase.
Recently, expectations for Alarm.com have lowered given the challenging macro environment it operates in. However, despite the pullback in consumer and business spending, Alarm’s Q4 2023 results were robust. Its total revenue increased by 8.7% compared to Q4 2022, and GAAP’s net income increased by almost 70%. Additionally, Alarm.com grew cash and cash equivalents to $697.0 million, compared to $622.2 million in the prior year. This brings its D/E ratio to 0.7257, a healthy level for a company at this growth stage.
Furthermore, Alarm.com has plenty of growth opportunities, especially in international markets. It is currently operating in over 60 countries. As the global smart home market is expected to grow at a CAGR of 27.07% by 2030, Alarm.com has room for expansion. One way that the company is accomplishing this expansion is through partnerships. For example, Alarm.com recently partnered with Ontario, Canada’s IESO, and added more than 100,000 homes in the first six months.
DexCom (DXCM)
DexCom (NASDAQ:DXCM) is an American company that creates medical IoT devices to monitor glucose levels in diabetic patients. Valued at $126.65, DexCom has a strong valuation with growth potential, as seen by the YOY valuation increase of 7.56% in the past year.
The medical technologies industry is projected to hold strong financially throughout this decade. At $610.2 billion in revenue currently, the market is expected to reach $748.2 billion by 2028 — a CAGR of 5.23% for 2024-2028. Looking past the growth outlook, the market is already well established, allowing DXCM to further its revenue sources.
DexCom reported a strong financial outing in Q4 2023 to end the fiscal year. DXCM brought in $1.03 billion in revenue, marking YOY growth of 26.9% compared to last year. Similar strong growth was mirrored in net income and diluted EPS, bringing in a respective $256.3 million and $0.62, equating to around 180% yearly growth for both categories. Solid financial performance was carried out into 2024, with the Q1 preliminary earnings forecasts projecting DXCM outperforming industry estimates.
DexCom recently partnered with StrideMD to further diabetic care through continuous glucose monitoring technology systems. With the additional connection of DexCom’s mobile app integration, expect sales to profit as DexCom becomes more accessible and usable for the average customer. DXCM is one of the more promising choices among IoT stocks.
On the date of publication, Michael Que did not have (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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.