Our Favorite Internet of Things Stocks For 2015

By Markets Fool.com

Regardless of which estimate you choose to believe, by virtually every barometer the Internet of Things, or IoT, is expected to explode in the next several years. By 2019, should the pundits prove correct, IoT-related devices will sell more than double the number of smartphones, tablets, PCs, smart car, and wearable units, combined. According to three of our Motley Fool contributors, Google , Intel , and Cisco Systems are all positioned to profit from IoT growth in 2015.

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Bob Ciura (Intel): The Internet of Things is indeed a very compelling growth catalyst in technology. Mobile, home, and embedded devices could all be connected to the Internet to integrate computing abilities. This would enable all these connected devices to share data over the cloud. My favorite Internet of Things play is semiconductor giant Intel . I like the company because of its unique ability to provide the best connectivity between devices and the cloud.

Intel presented at a recent analyst summit in London and said there are 50 billion potentially connectable devices being added every day. At the same time, right now 85% of currently deployed systems are not connected and do not share data with each other or over the cloud. Intel estimates the global economic impact of the IoT will be $2.7 trillion-$6.2 trillion in 2025.

The company is in a great position to capitalize on this, its IoT business is already off the ground and putting up impressive results. Over the first three quarters of 2014, Intel's IoT segment generated 22% revenue growth year over year. Last quarter was a record for IoT product volumes. IoT was Intel's second-fastest growing business. It's now on pace to be a $2 billion business by revenue, and future growth potential is still strong. Intel has the potential to do great things in cloud IoT solutions, through monetizing hardware, software, and data management.

Tim Brugger (Cisco): If we learned anything from Cisco's most recent earnings report, it's that CEO John Chambers efforts to transition Cisco into cloud technologies via its data center solutions and IoT-related markets are beginning to pay off. Last quarter's revenues set a fiscal Q1 record, non-GAAP earnings increased, and Cisco added another $3.9 billion in cash and equivalents to its already strong balance sheet -- and that included paying its shareholders a dividend of $0.19, good for a 2.85% yield.

As positive as last quarter's earnings were, Cisco's successes in IoT-related deals were just as impressive, and bode well heading into 2015. Cisco announced it is expanding its "Smart City" initiative across India, signed a deal with Berlin to explore "smart city" alternatives, and expanded its suite of smart transportation and infrastructure solutions. All those IoT advancements come on the heels of fiscal Q4's deal with the city of Hamburg to create, "smart traffic, smart street lighting, infrastructure sensing and remote citizen services." Kansas City, a couple of towns in Denmark, and Barcelona are also on Cisco's smart city radar.

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Clearly Cisco is betting big on smart cities, and why not? Sure, smart watches, cars, and homes garner all the fanfare, but smart cities, according to estimates, are poised to become a whopping $1.5 trillion market in the next 10 years, and Cisco is positioning itself as the leader. Let's not forget, Cisco is trading at a mere 11.8 times next year's earnings, making it a great near-term value. This upcoming year should be a good one for Cisco shareholders, and IoT is quickly becoming a big part of the reason why.

Joe Tenebruso (Google): This year has been lackluster for Google's shareholders, with the search titan's stock price down more than 10% since the start of 2014. The decline has accelerated in recent days, as Wall Street analysts have followed their familiar routine of cutting their price targets, after the stock has already fallen. I am more focused on what lies ahead, and like to peer much further into the future than Wall Street's quarter-by-quarter focus typically allows. Viewed through a long-term (read multi-year) perspective, Google's future appears bright indeed.

The search giant raised eyebrows when it acquired thermostat maker Nest Labs for $3.2 billion in January, but much like its purchase of YouTube, Google's acquisition may prove to be a steal. That's because the acquisition of Nest, along with subsequent purchases of Wi-Fi webcam maker Dropcam and smart home automation start-up Revolv, have given Google a strong beachhead into the connected home industry -- a market that analysts believe could grow to a $490 billion by 2019.

Increasingly, IoT technologies will allow our homes and the appliances we use every day to become more integrated, automated, and connected, thereby providing improved convenience, energy efficiency, and safety benefits. If Google can maintain and strengthen its lead in this fast-growing and potentially massive market, it will fortify its ever-expanding ecosystem and widen its already dominant competitive moat. That, in turn, will benefit Google's shareholders not just in 2015, but for years to come.

The article Our Favorite Internet of Things Stocks For 2015 originally appeared on Fool.com.

Bob Ciura has no position in any stocks mentioned. Joe Tenebruso has no position in any stocks mentioned. Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems, Google (A shares), Google (C shares), and Intel. The Motley Fool owns shares of Google (A shares), Google (C shares), and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.