News flash: “Long duration assets” are on sale in the equities market.
What does that mean? It means companies with business models based on huge future growth because of revolutionary technology and changing consumer trends are getting tossed overboard lately, making them very cheap relative to their expected long-term potential.
Why is it happening? Because we are talking about companies where the bulk of their cash flows are going to come years from now. Even if those flows have the potential to be astronomical, that matters to models: interest rates are going up, and institutional funds often rely on something called the “Discounted Cash Flow” model (or “DCF” for short), which incorporates the cost of money and cross-asset competing returns as a factor.
In other words, if rates go up, then 1. the ROI on future investments theoretically suffers due to increasingly expensive funding and 2. the expected cash flowing to shareholders over the long-term in the form of eventual distributions – ie, dividends and the like – should be valued at a reduced level given the growing potential for risk-free securities – ie, government bonds – to offer strong annual returns. And, yes, the “risk-free” part of that sentence is the big one because we are talking about the future possibly years from now. And who knows what might happen?
However, in the big picture, this is the lifeblood of a secular bull market fueled by technological change. It’s the dip of opportunity. The long-term trends in real-world consumer patterns and technology aren’t becoming less powerful. Revolutionary changes are still just as forceful. But institutional money managers are simply less interested in those same shares because of established models.
A great example is in the Smart-Home Technology Space. According to recent research, the Smart-Home space is projected to exceed $178.5 billion in annual sales by 2025. This is one of the most robust consumer trends on the map right now, and it has the potential to power a massive market opportunity lasting for years into the future at a market leading growth rate.
Even so, companies with leadership roles in this space are on sale right now. And that could be a big opportunity for agile market participants looking for portfolio angles on the run into the end of the year and beyond. With that in mind, we take a look at some of the most interesting names in the Smart-Home Technology Space below, including some interesting recent catalysts.
Vivint Smart Home Inc (NYSE:VVNT) is an interesting name in the smart home space that delivers an integrated smart home system with in-home consultation, professional installation and support delivered by its Smart Home Pros, as well as 24/7 customer care and monitoring.
According to its materials, the company is dedicated to redefining the home experience with intelligent products and services. It also notes that it serves more than 1.7 million customers throughout the U.S. and Canada.
Vivint Smart Home Inc (NYSE:VVNT) recently announced that Daniel Garen has been named Chief Ethics and Compliance Officer for the organization. In his role, Garen will be responsible for upholding Vivint’s strong culture of corporate compliance as well as implementing new systems to ensure policies are being enforced across the business. Garen will report to Vivint’s Board of Directors and to its CEO, David Bywater.
Garen brings more than two decades of experience in compliance to Vivint. He joins the company from DLA Piper, where he developed and implemented best-in-class compliance and risk management strategies at public and private companies around the world. As a technology compliance lawyer, Garen has a long track record of success creating, implementing and managing compliance programs for Danaher Corporation, Wright Medical Technology, Siemens Medical Solutions and Bayer Healthcare, among others.
“As Vivint moves into its next chapter of growth, Daniel will be instrumental in guiding our ethics and compliance efforts and ensuring they align with our business objectives,” said Vivint CEO David Bywater. “His level of experience and understanding of Vivint’s unique needs and challenges will make him a valuable asset to the company’s future.”
Vivint Smart Home Inc (NYSE:VVNT) has suffered a bit of late, with shares of VVNT taking a hit in recent action, down about -10% over the past week. The company had no reported sales in its last quarterly financial data.
SPYR Technologies (OTC US:SPYR) is possibly the most underappreciated name in the space at this point given its strong recent gains in commercial traction.
SPYR develops and sells products complementary with products designed by and for the Apple Inc (NASDAQ:AAPL) ecosystem of smart home technology. SPYR’s Applied MagiX subsidiary is creating a niche as a downstream play to capitalize on gaps in consumer needs as we undergo this massive transition, helping consumers make their smart home ecosystems work smoothly and easily.
SPYR Technologies (OTC US:SPYR) already offers a wide range of products, including its MagixDrive Wireless CarPlay adapter, which allows users to access CarPlay wirelessly using an iPhone, its Homekit Secure Video Camera With iCloud Storage, a Multipurpose Sensor With Alarm, an Environment & Motion Sensor, and a Window & Door Contact Sensor. All of these products are designed to work seamlessly with Apple ecosystem smart home products.
Most recently, the company announced the planned release of new car accessories from its Applied Magix subsidiary. The first accessory is expected to be a MagixPower car charger with dual USB-C ports and Power Delivery (PD) capability.
According to its release, Applied Magix launched the MagixDrive Wireless CarPlay adapter in June, which was the company’s first branded and inaugural Apple CarPlay product, allowing users to access CarPlay wirelessly using an iPhone. Going forward, Applied Magix plans to release several other accessories for the smartCar. The MagixPower car charger with dual USB-C ports and Power Delivery (PD) capability is expected to be the first in a series of accessory launches.
SPYR Technologies (OTC US:SPYR) subsidiary CEO, Dr. Harald Zink, noted, “With the 30W PD capabilities of our Truly Convenient charger in your car, not only will your iPhone and iPad charge much faster, reaching 50% charge in half an hour, and 80% charge in an hour, but our charger also provides two USB-C ports, benefitting passengers’ iPhones as well. Sharing is caring, after all.”
Honeywell International Inc (NASDAQ:HON) bills itself as a “software industrial company” that offers industry specific solutions to aerospace and automotive products and services. The company specializes in turbochargers control, sensing and security technologies for buildings and homes; specialty chemicals; electronic and advanced materials; process technology for refining and petrochemicals; and energy efficient products and solutions for homes, business and transportation.
It operates through multiple segments, including Aerospace, Home and Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions. It is also widely considered an embedded leader in the smart-home trend given its large-scale integration in cybernetics and home systems.
Honeywell International Inc (NASDAQ:HON) recently announced a new mobility application that enables deskless workers in the manufacturing, real estate, aviation and industrial process industries such as mining, refining, chemicals and oil and gas to receive remote assistance in the field. Honeywell Forge Worker Assist is a software-as-a-service (SaaS) based application that accelerates the resolution of issues, increases efficiency with tasks such as inspections and quality audits, and aims to empower employees to further develop job competencies.
“Braskem Idesa is committed to investing in the best workforce productivity tools in the petrochemical industry,” said Roberto Velasco Gutiérrez, industrial director, Braskem Idesa. “By collaborating with Honeywell in the field testing of connected worker technologies, we provide our workforce with access to the latest developments for them to remain productive and safe as they perform their daily tasks.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week.
Honeywell International Inc (NASDAQ:HON) managed to rope in revenues totaling $8.8B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 17.8%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($12.3B against $18.1B, respectively).
Other key stocks in the explosive Smart Home space include Amazon.com, Inc. (NASDAQ:AMZN), AlarmCom Hldg Inc (NASDAQ:ALRM), ADT Inc (NYSE:ADT), Resideo Technologies Inc (NYSE:REZI), Apple Inc (NASDAQ:AAPL), and Alphabet Inc (NASDAQ:GOOG).
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