The internet of things (IoT) is among the drivers of the fourth industrial revolution, with significant advances made in the fields of machine learning (ML) and artificial intelligence (AI). Furthermore, with rising demand for sensors and cloud services in the 5G era, IoT is expected to witness significant growth this year and beyond.
Continued innovations in the IoT industry, such as IoT in healthcare, Edge IoT, IoT in Business and Industry, IoT for Resilient Organizations, and other trends, should propel the industry’s growth further. The global IoT market is expected to reach $1.85 trillion by 2028, registering a CAGR of 25.4%.
Given this backdrop, we believe prominent IoT stocks Emerson Electric Co. (EMR), Zebra Technologies Corporation (ZBRA), and ON Semiconductor Corporation (ON) could be ideal picks for 2022. These stocks are also rated ‘Buy’ in our proprietary POWR Ratings system.
Emerson Electric Co. (EMR)
EMR is a global technology, software, and engineering company that provides solutions in industrial, commercial, and residential markets. The company operates through Automation Solutions; and Commercial & Residential Solutions segments. EMR’s segments serve various markets, including oil and gas, power generation, and provide products and solutions that promote energy efficiency and protect food quality and sustainability.
Last month, EMR acquired Mita-Teknik, an automation business company for wind power generation, in an all-cash transaction. This acquisition should expand EMR’s renewable power generation automation solutions to the wind power market and enhance its ability to provide more value to global power customers.
EMR’s net sales increased 8.5% year-over-year to $4.95 million in the fiscal fourth quarter ended September 30, 2021. The company’s net earnings came in at $674 million. Its EPS came in at $1.11. Also, the company’s cash and cash equivalents came in at $2.35 billion during the period.
Analysts expect EMR’s revenue for the fiscal year 2022 to be $19.44 billion, representing a 6.6% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to grow 19.8% in fiscal 2022. Its stock price has increased 22.8% over the past year.
EMR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a B grade for Stability and Quality. We’ve also graded EMR for Sentiment, Value, Momentum, and Growth. Click here to access all of EMR’s ratings. EMR is ranked #33 of 93 stocks in the Industrial – Equipment industry.
Zebra Technologies Corporation (ZBRA)
ZBRA manufactures and sells marking, tracking, and computer printing technologies. The company operates in two segments: Asset Intelligence & Tracking; and Enterprise Visibility & Mobility. Its products include rugged mobile computers and tablets, thermal barcode labels, RFID printers, encoders, and other intelligent software and solutions.
In October 2021, ZBRA acquired antuit.ai, a provider of artificial intelligence (AI)-powered Software-as-a-Service (SaaS) solutions specific to forecasting and merchandising for the retail and CPG industries.
During the third quarter ended October 2, 2021, ZBRA’s total net sales increased 26.9% year-over-year to $1.44 billion. Its gross profit grew 31% from the year-ago value to $646 million. The company’s operating income rose 58% from the prior-year quarter to $237 million. Also, its net income increased 71.6% year-over-year to $199 million.
ZBRA’s revenue is expected to increase 5.2% year-over-year to $5.91 billion in fiscal 2022. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the four trailing quarters. Its EPS is expected to increase 43.2% in fiscal 2021 and 7.5% in fiscal 2022. The stock has gained 55.4% over the past year.
ZBRA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Quality and Sentiment.
In addition to the POWR Rating grades I’ve just highlighted, one can see ZBRA’s ratings for Growth, Value, Momentum, and Stability here. The stock is ranked #15 of 79 stocks in the B-rated Industrial – Machinery industry.
ON Semiconductor Corporation (ON)
ON offers a portfolio of sensors, power management, connectivity, custom and system on chip (SoC), analog, logic, timing, and discrete devices. The company operates in three segments – Power Solutions Group (PSG); Advanced Solutions Group (ASG); and Intelligent Sensing Group (ISG). ON company serves original equipment manufacturers, distributors, and electronic manufacturing service providers.
In November, ON acquired GT Advanced Technologies, a producer of silicon carbide (SiC). This acquisition should enhance ON’s ability to secure and grow the supply of SiC. After the acquisition, ON should be able to provide end-to-end power solutions from SiC crystal growth to fully integrated intelligent power modules.
ON’s revenue for the third quarter ended October 1, 2021, increased 32.2% year-over-year to $1.74 million. The company’s gross profit grew 12.6% from the year-ago value to $720.8 million. Its operating income rose 235.5% from the prior-year quarter to $399.2 million. Also, the company’s net income increased 92.6% year-over-year to $310.4 million.
ON’s revenue for the fiscal year 2022 is expected to be $7.12 billion, representing a 6.5% year-over-year growth. The company has surpassed the consensus EPS in each of the trailing four quarters. Its EPS is expected to increase at the rate of 229.4% in fiscal 2021 and 16.4% next year. The stock has surged 117.2% over the past year.
It’s no surprise that ON has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Growth and a B grade for Value and Momentum.
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EMR shares were trading at $97.28 per share on Wednesday afternoon, up $1.45 (+1.51%). Year-to-date, EMR has gained 4.64%, versus a 0.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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