In recent years, there has been a gradual shift towards a cleaner, more distributed and more efficient energy ecosystem. People are more willing to manage and maintain their own microclimate at home. What makes it more convenient? The falling cost of technology has made smart home technology more affordable, providing homeowners with a more convenient environment to spend time.
Home security and automation are gaining momentum
Before we discuss further, let’s clarify one major doubt, what makes smart home technology important? The conservation of resources, well-being, usability, entertainment and security have made smart home products important and attractive. For example, it ensures homeowners save electricity and lower electricity and water bills, creating an optimal or comfortable ecosystem indoors while taking outdoor environmental conditions into account.
While the concept isn’t new, the smart home space has plenty of room to expand in the United States. In fact, the smart home market ended 2020 on a high note despite the pandemic. Shares of pure smart home companies like Alarm.com Holdings, Inc. ALRM and Vivint Smart Home, Inc. VVNT jumped more than 100% and the rest of the companies saw an average gain of 35% in 2020.
One of the main reasons for the dramatic growth in smart home technology is that people are reconnecting with their homes during the pandemic. Staying at home has encouraged many people to opt for restoration, renovation, and to look for ways to make their homes more energy efficient. From security cameras and video doorbells, to smart locks, motion detectors and thermostats, lighting and garage door openers, sales of all items picked up last year. Parents can easily work from home and monitor the front door, children in the garden and control electronic devices from their computers, tablets or smartphones. In fact, to reduce the risk of getting contaminated / infected, owners can easily contact delivery agents to ask them to leave packages in a convenient location.
According to the connected intelligence of NPD report, half of American consumers own at least one smart home device, up 35% since the start of 2020. The report finds that the biggest sales gains have been seen in security systems, door openers in smart garages and smart lighting which increased by 44%, 21% and 19%, respectively, in 2020.
Energy efficiency spending is expected to increase
The need for home automation is growing by leaps and bounds on low energy consumption, which ultimately results in lower household expenses and a reduced carbon footprint. In addition, the current government is focused on increasing spending on energy efficient buildings and homes.
President Joe Biden has set a goal of achieving zero net emissions by 2050 at the latest and plans to modernize 4 million buildings and protect 2 million homes over the next four years. In this process, the government must modernize and opt for an efficient home appliance manufacturing supply chain, and enable financing by offering direct cash rebates and low cost financing to upgrade and electrify home appliances. and installing more efficient windows, which in turn will lower energy bills.
According to Fortune Business Insights report, the global smart home market size was $ 79.9 billion in 2018 and is expected to reach $ 622.59 billion in 2026, with a CAGR of 29.3%.
5 stocks to watch
As America strives to achieve net zero emissions, homeowners must focus on converting their existing homes into more energy efficient ecosystems. Smart homes are designed to make the most of available energy and reduce overall household energy use. Therefore, the increasing adoption of smart home technologies will constantly increase the space. We have therefore selected five stocks that can take advantage of the recent increase in demand for these technologies.
Alphabet Inc. GOOGL offers Google Home and Alexa which can be used to control the home environment with simple voice commands. The company’s expected profit growth rate for the current year is almost 50% compared to Zacks Internet services Forecast industry profit growth of 4.7%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 27.3% in the past 60 days. Google has a Zacks # 1 (strong buy) ranking. You can see The full list of today’s Zacks # 1 Rank stocks here.
Johnson Controls International plc JCI designs, sells, installs and services heating, ventilation, air conditioning, controls, refrigeration, integrated electronic security, energy efficiency solutions and more. The company’s expected profit growth rate for the current year is 17.4% compared to Zacks Security and safety services Expected industry profit growth of 11.4%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 3.5% over the past 60 days. Johnson Controls sports a Zacks Rank # 2 (Buy).
Honeywell International Inc. HON operates as a diverse technology and manufacturing company. The company also offers automated home solutions and has merged with Intel to develop an advanced security platform for home solutions since April 2019. The company’s expected profit growth rate for the current quarter is 51.6 % compared to Zacks. Diversified operations Expected industry profit growth of 24.2%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 1.7% in the past 60 days. Honeywell wears a Zacks Rank # 3 (Hold).
The assets of Alarm.com provides interactive security solutions to control and monitor security systems. This Zacks Tier 3 company which is part of Zacks’ security and security services business has an expected profit growth rate of 10.8% for next year. Zacks’ consensus estimate for the company’s current year earnings has been revised up 1.2% in the past 60 days.
Resideo Technologies, Inc. REZI develops, manufactures and sells comfort, residential thermal and security solutions to the commercial and residential end markets. The company’s expected profit growth rate for the current year is 66.9% compared to Zacks’ security and security services industry’s projected profit growth of 11.4%. Zacks’ consensus estimate for the company’s current quarter earnings has been revised up 23.4% in the past 90 days. Resideo wears a rank 3 of Zacks.
5 actions in the process of doubling
Each has been selected by a Zacks expert as the # 1 favorite stock to earn + 100% or more in 2020. Each comes from a different industry and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stock in this report is flying under Wall Street’s radar, which provides a great opportunity to get into the ground floor.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.