You still have time to make big money on the greatest trend in technology.
During the past 12 months, I’ve told my subscribers how every single device you use will soon be “connected.”
I’m not just talking about your mobile phones or tablets … although those will certainly be part of this incredible new profit wave.
But I want you to think bigger than that.
That’s because everything from cars, appliances, televisions and thermostats will soon be connected to the Internet — and I want you to be ready for it, because it’s going to be huge.
Cisco (CSCO) calls the connectivity of all these devices the “Internet of Everything” (IoE). The networking giant predicts over 50 billion devices will be connected to the Internet by 2020. That’s up from just over 12.5 billion devices today.
Even if the market only ends up being half of what Cisco predicts … The opportunity will still be enormous. And this could lead to big profits for investors willing to buy stocks within the IoE trend.
Let me explain …
As I told you last week, I just got back from the Consumer Electronics Show in Las Vegas. That’s one of the largest conferences in the world, which featured more than 3,600 exhibitors in over 2.2 million square feet of space this year.
Last year, Cisco and chip giant Qualcomm (QCOM) were two of the few companies talking about the IoE. In short, most investors and people in attendance were learning about this remarkable trend for the first time.
This year, hundreds of companies were talking about it …
There were “Smart Homes” on display at the Samsung (SSNLF), LG (LPL) and Sony (SNE) exhibits.
“Smart Home” is the term used to connect every electronic device inside your home. Soon you will be able to control your thermostat, washing machine and alarm system from miles away by using your mobile phone.
Home retail giant Lowe’s (LOW) talked about installing these devices in your home. Honeywell (HON)— which manufactures many of these devices — displayed its Smart Home platforms. Even Apple (AAPL) is expected to release its own Smart Home kit to be run exclusively on its iOS operating system.
After I spent just a few hours at the CES, the trend was clear: The biggest technology companies in the world are going “all in” on IoE. They are finding more ways to connect everything to the Internet.
This is significant.
For example, the IoE can help parking meters adjust their rates based on demand, control traffic lights to cut back on energy costs, and reduce waste-management costs with sensor-equipped garbage cans.
Being connected can help industrial companies like airlines and railroads spot major problems in their fleets before it’s too late. They now have sensors monitoring the wings, engines and cockpits of planes. They also monitor the bearings and cargo on trains.
In short, spotting these problems early on can result in fewer delays at the airport. They could also help railroad companies avoid disasters such as derailments — which can cost a company tens of millions of dollars.
Sure, companies like Cisco, Samsung and LG will be beneficiaries of IoE. However, these companies are not pure plays. They operate in dozens of sectors outside of IoE.
Many of their products like routers, switches and televisions are simply appliances in slow-growing industries.
The better way to play this trend is to buy the “nuts and bolts” companies that will help every device get connected. This includes semiconductor companies like Qualcomm and Broadcom (BRCM).
In December 2012, I recommended chip maker Skyworks Solutions (SWKS) as my favorite play on IoE. That’s when I started researching this amazing trend.
I knew Skyworks would be a huge beneficiary since their chips were in almost all the best devices being sold at Apple and Samsung. Plus, the stock was dirt cheap.
Since my call, shares are up over 180%.
On a recent conference call to investors, Skyworks said:
The company is capitalizing on the growing opportunity within the Internet of Things [Also known as the Internet of Everything].
We anticipate continued strength beyond the June quarter as our products continue to gain momentum.
Management was dead-on. Skyworks is still running higher and earnings and revenues are surging. Shares will likely continue running higher over the next few years as billions more devices get connected.
However, after the huge run in Skyworks — I see more upside in chip plays Qualcomm and Broadcom. These stocks are trading at just 12 times earnings. That’s a huge discount to the S&P 500 index, which is trading at 17 times earnings.
Plus, Qualcomm and Broadcom are expected to grow earnings much faster than the average S&P 500 company. And both companies pay dividends.
It’s not too late to invest in the IoE. It’s one of the biggest trends in technology. And will get bigger over the next few years as every major technology company is investing tons of cash to connect all of their devices.
To make the most money on this trend, I suggest buying the nuts and bolts companies. These are the pure plays of the IOE — and will likely see earnings and revenue surge for years to come as more and more devices get connected.
Good Investing,
Frank Curzio
