Young Investors: What’s the Best Way to Invest in the Internet of Things?

Things may take some time to play themselves out, but there aren’t many people who will disagree that the Internet of Things (IoT) is likely to have a major impact on the way we conduct our everyday lives.

From the age of big data to multi-connected homes and mobile devices to businesses that want to know where you are, where you’ve been, and what you’re doing while you’re there, it sure is beginning to feel a little bit like George Orwell’s famous novel, 1984.

But it’s not that bad, really.

In the same way that the internet has helped to improve lives across the globe, the changes we can expect to see from IoT technology should help us in being able to get exactly what we want, where we want it, faster than we’ve ever had before in human history.

But as an investor, what’s the best way to capitalize on this emerging and exciting technological breakthrough?

Straight out of the gate, I can tell you that there are already two Canadian technology companies going hard after the IoT market.

First, there’s BlackBerry (TSX: BB)(NYSE: BB), which most will be familiar with for famously tanking after proving it wasn’t able to respond to changing consumer preferences for smartphone handsets.

But despite failing as a hardware company, the one thing that BlackBerry has always done well is mobile security.

This is, after all, the same company that was at one point responsible for securing the wireless technology of the entire U.S. administration, including, of course, the president of the United States.

But under the leadership of CEO John Chen, the Waterloo-based company has been busy re-positioning itself to go after the faster-growing IoT market, and with much success to date.

Praise has already begun to roll in for BB’s new Enterprise of Things technology platform, and thanks to its recent acquisition of Cylance, which also happened to be the company’s largest acquisition in its history, BB’s mobile security platform just got a whole lot sweeter.

Then there is Sierra Wireless (TSX: SW)(NASDAQ: SWIR), a much smaller company than BlackBerry, valued at about one-10th its size, but a company that’s also been frantically re-positioning itself to go after the rapidly expanding market for IoT technology and services.

Because it’s currently undergoing a fairly extensive restructuring, investors can expect its expenses will be higher, future sales might not yet be fully realized, and, as a result, its GAAP-reported financial results in 2019 may not, in fact, be representative of the true underlying economic realities at the firm.

Yet its shares have demonstrated considerable support at current levels over the past few months.

If the IoT sector as a whole were to rally, I could easily see Sierra’s share price outperforming BB’s owing to the higher risk/return profile of the smaller but less-established company.

However, if markets were to suffer through a period of relative weakness, we would probably expect to see BlackBerry stock outperform by the same measures and the fact that it’s a considerably larger company with a longer track record of operating history, not to mention that it’s already further along with its organizational restructuring than where Sierra finds itself today.

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