IoT is rapidly gaining prominence amid the coronavirus outbreak as more and more enterprises turn to the technology for prevention and control of the pandemic.

The concept of IoT entails several devices connected to the Internet for the purpose of gathering information, scrutinizing functionality and automating various systems. For instance, an IoT watch can monitor your health, while an IoT-connected doorbell can easily send you a message whenever someone knocks at your door.

IoT-enabled sensors can control traffic lights and even be used in airplanes to report maintenance issues. In fact, IoT allows supervision or automation of almost anything — from light bulbs to automobiles and refrigerators to smart speakers at home.

Rapid increase of remote working, web-based education and health diagnosis amid lockdowns and shelter-in-place guidelines to curb the spread of the COVID-19 virus is expected to bolster spending on IoT.

Moreover, rise in demand for contactless delivery through drones, digital payments, bedside telemetry, electric vehicle charging, and remote health monitoring remains noteworthy.

As economies reopen; proliferation of IoT devices, including sensors, smart device, and proximity awareness applications, to aid people resume work, school and other activities amid the social distancing norms has picked up steam.

Markedly, 5G is expected to unlock the full potential of IoT-backed proliferation of smart connected homes, hospitals, factories and cities, and self-driving vehicles.

New Normal Trends Favor IoT Growth Prospects

Advancements in 5G, WiFi-6, data center, enterprise and automotive Ethernet applications have accelerated transformation in IoT devices. Further, evolution of semiconductor manufacturing processes from 10 nanometer (nm) to 7 nm and even 5 nm technology is opening new business avenues for innovation in IoT-driven connected devices.

Growing clout of high-speed networking, smartphone processors and high performance computing (HPC) data center applications, amid the backdrop of 5G and cloud computing boom triggered by the new normal lifestyle, is bolstering the development of advanced connected smart IoT devices.

Moreover, momentum in applications, gaming, wearables, drones and VR/AR devices is fueling massive growth in the space. This can primarily be attributed to the coronavirus crisis, which has led to increase in usage of online services globally.

Despite the coronavirus pandemic-led crisis, the optimism in this space is evident from the notable performance of Global X Internet of Things ETF (SNSR), which has gained 18.6% year to date compared with SPDR S&P 500 ETF Trust's (SPY) growth of 7.8%.

Per IDC data, IoT spending is projected to witness a CAGR of 11.3% between 2020 and 2024. The report also mentions that “smart home spending, consumer driven and the second largest use case in terms of overall spend, will grow 14.4% year over year in 2020.”

Here we pick four stocks that are well-positioned to make the most of IoT wave amid solid growth in 5G infrastructure spending and proliferation. All the four stocks currently carry a Zacks Rank #2 (Buy) and have outperformed the S&P 500 composite on a year-to-date basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year-to-Date Price Performance

Alphabet’s (GOOGL Quick QuoteGOOGL - Free Report) has introduced consumer-based products such as Google Assistant for connected homes with IoT investments focused on creating cloud-based solutions. Expanding user base of automated Google Home smart speaker, makes it a primary IoT stock worth betting on.

A pioneer in search market, Alphabet, also enjoys a dominant position in the IoT-backed autonomous vehicles market, courtesy of Waymo’s relentless efforts.

Further, Google’s $2.1 billion bet on wearable fitness company, Fitbit is a testament to its IoT initiatives. The Fitbit acquisition provides Google an opportunity to strengthen its footprint further in the $3 trillion health care market, which has played a breakout role amid the pandemic.

The buyout expands Google’s presence in the lucrative health care market, as it can provide valuable insights to medical professionals about broader health trends. It has also bolstered its footprint in the healthcare industry with its life science division, Verily.

Alphabet’s current-year earnings estimates were revised over the last 60 days, driving the Zacks Consensus Estimate upward by 10 cents to $44.84 per share.

Qorvo (QRVO Quick QuoteQRVO - Free Report) is benefiting from broad-based demand in 5G handsets, Wi-Fi 6 and IoT products. Synergies from Decawave, Active-Semi and MEMS technology acquisitions have significantly expanded Qorvo’s capabilities and poises it well to benefit from growing demand for proximity awareness, secure payments and secure access for smartphones, automotive and IoT.

In the IoT-powered connectivity and broadband business, the company is increasing shipments of Wi-Fi 6 solutions and secured multiple cable amplifier design wins to cater to rising need for data to home owing to COVID-19 induced shelter-in-place guidelines. Notably, Qorvo is expanding its global customer base for Wi-Fi 6 solutions, front-end modules (FEM) and BAW filters.

Moreover, fiscal 2021 estimates were revised over the last 60 days, driving the Zacks Consensus Estimate upward by 7% to $7.06 per share.

NXP Semiconductors N.V. (NXPI Quick QuoteNXPI - Free Report) is the leader in general purpose microcontrollers and application processors in industrial and IoT markets.

The company is poised to gain from growth in the industrial and IoT businesses, driven by the replacement of traditional mechanical equipment with smart and connected electronic equipment utilizing various sensors, processors, connectivity and security chipsets, among others.

The company has also acquired Marvell’s (MRVL Quick QuoteMRVL - Free Report) WiFi Connectivity Business Unit, Bluetooth technology portfolio and related assets, for $1.76 billion in cash in May 2019 in a bid to expand its IoT portfolio.

The company’s current-year earnings estimates were revised over the last 60 days, driving the Zacks Consensus Estimate upward by 7 cents to $4.90 per share.

Rockwell Automation (ROK Quick QuoteROK - Free Report) offers industrial automation power, control and information solutions that helps manufacturers achieve a competitive advantage for their businesses.

The company is focused on enhancing its FactoryTalk InnovationSuite, which is a testament to its growing IoT efforts. The software aids businesses to leverage edge-to-enterprise analytics, ML, industrial internet of things (IIoT) and AR to enhance decision making and boost outcome of industrial operations.

Markedly, IIoT is a subdiscipline of IoT, encompassing connected large-scale machinery and industrial systems such as factory-floor monitoring, HVAC, smart lighting, and security.

Moreover, the company’s alliance with PTC (PTC Quick QuotePTC - Free Report) is noteworthy. Integration of Rockwell’s offerings with PTC’s Vuforia and ThingWorx platforms aids clients to automate, simplify, and accelerate OT/IT convergence.

Also, fiscal 2021 estimates were revised over the last 60 days, driving the Zacks Consensus Estimate upward by 1.8% to $7.88 per share.

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