3 Internet of Things stocks to change your future

These three Internet of Things stocks are worth a closer look.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As you may have noticed, everyday consumer products and machines can now be connected to the internet, where they can share data and interact with other electronic devices. With the rise of the Internet of Things, or IoT, demand for a new range of small, high-powered chips that enable electronic devices to collect and share information is growing at a rapid pace.

Investors looking to benefit from the IoT trend should take a closer look at these stocks.

High hopes

Graphics chips designer Imagination Technologies (LSE: IMG) could stand to gain from the growing video processing requirements of IoT devices to deliver ever better user interfaces. The company also has a growing presence in the processing and radio processing chip markets and has high hopes from the scalable IP solutions it can offer to IoT products.

However, investors need to be aware that Imagination is currently heavily exposed to Apple, which accounts for nearly half of the group’s total revenues. With this dependence on a single customer, Imagination’s share price is highly susceptible to Apple’s iPhone sales figures. And since Apple’s new iPhone 7 sales have fallen short of earlier expectations, Imagination’s shares have trended downwards too.

Nevertheless, city broker Liberum is sanguine. It believes that demand for the larger iPhone 7 is doing better than the market currently expects, and supply shortage means Imagination could expect to get higher royalty payments from Apple in 2017.

Car market

As manufacturers rush to install wireless IoT devices in your cars, Laird (LSE: LRD) is well positioned to benefit, especially following its recent foray into the automotive sector. Laird acquired German connected car solutions company Novero back in 2015, in order to gain access to the fast-growing automotive chip sector, but things haven’t been plain sailing.

Novero’s profitability has been a drag on the group’s performance and Laird has been finding the restructuring and integration process costly. But in the longer run, the company’s diversification could eventually pay off for investors. The company has made a big step in the automotive business, and it comes just as smartphone demand is beginning to decline. And since the automotive sector is the fastest-growing segment in the chip market, it offers a very exciting opportunity for the firm.

Industrial applications

The rise of the IoT isn’t just about improving connectivity for consumer goods. We’re seeing the impact of the IoT in industry too. Whether it’ll be in energy, transportation, or manufacturing automation, smarter machines can be used to better track performance, improve efficiency and increase profits. And at the heart of this Industrial Internet of Things, or IioT, is machine-to-machine (M2M) connectivity.

Here, CML Microsystems (LSE: CML), which designs and manufactures mixed-signal and Radio Frequency (RF) semiconductors, stands to benefit. The company is focused on two highly niche markets in global communication and solid state storage, which allows it to concentrate on ensuring quality and reliability, and enables it to meet the demanding specifications of industrial and professional applications.

After a difficult period in the past few years, things are picking up again, with city analysts expecting its earnings to grow by 3% this year, and 16% for 2017/18. This implies the shares are valued at a forward P/E of 20.9 and 18 respectively.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jack Tang has no position in any shares mentioned. The Motley Fool UK owns shares of Imagination Technologies. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »