4 Best Internet Of Things Stock Buys
This story appears in the December 28, 2015 issue of Forbes. Subscribe
The Internet of Things is easily the most overhyped technology advance of the last 2,000 years. It’s less important than agriculture, the internal combustion engine, the electric light, the airplane, antibiotics, wireless phones, space travel, the Internet itself and, arguably, sugarless gum.
But it’s still incredibly important and could represent one of the most lucrative investment opportunities of our lifetime.
Connecting every tangible item and every person in an immersive web of dynamic intelligence over the next 15 years will yield stunning productivity, environmental, medical, entertainment and human benefits.
The new connective mesh could usher in the sort of utopian “hive mind” imagined by science fiction and currently practiced by bees and ants in which no keys are ever lost, no fact unremembered and no communications unsent. Imagine a mind-blowing state of total awareness.
With changes so massive coming you would think it would be easy to figure out how to take advantage. Most white papers at think tanks focus on the connectivity of the things, such as network equipment and sensors. And, to be sure, the recent spate of big semiconductor mergers–i.e., Avago buying Broadcom, Intel buying Altera and NXP Semi buying Freescale–are aimed at scaling up to dominate this next phase of profound connectivity.
Yet most of the value of this brave new world will be in the software that compiles, analyzes and gives meaning to the data collected by billions of sensors and seamlessly knits together objects and people. You might even say that the best Internet of Things projects won’t be products at all. They will be services that help us navigate the physical and online worlds with less friction and more joy. The easy software bets in this space are platform toll-takers like the Amazon Web Services and the Azure cloud services unit of Microsoft. But for aggressive investors, the smart bet will be in smaller, cutting-edge software and design companies that help clients bend and blend the worlds of sensors, marketing, connectivity, the cloud and aesthetics for customers’ benefit.
One of the most intriguing along these lines is Globant (GLOB, 36), a little-known technology design and engineering firm that went public in mid-2014 at $10 and has since quietly tripled, where it sports a modest $1.2 billion market cap and a forward price/earnings multiple of 32 times.