Sierra Wireless Deal with Volkswagen Is Only the Start

swir stockPlay IoT Growth with Sierra Wireless

The growth of the Internet of Things (IoT) segment is only in its infancy, and by many accounts, the development will be massive, which will reward companies like Sierra Wireless, Inc. (NASDAQ:SWIR).

Many of you may not have heard about Sierra Wireless, based in Canada, but the company is an up-and-coming star in the IoT segment.

The stock market sure knows about SWIR stock, and has rewarded it by driving up the share price 141% over the past year, including a massive 41% over the past five sessions.

I first noticed Sierra Wireless stock way back in 2000, when the stock was trading at around $50.00. Since then, it has been a long journey with SWIR stock stuck in a sideways channel with resistance at around $30.00.

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Chart courtesy of StockCharts.com

We could see a sustained breakout from this sideways range with the recent emergence of a bullish golden cross pattern and big opening trade gap unless the stock retrenches to cover the gap.

On the upside, SWIR stock could target the $45.00 level, previously encountered in early 2015 and 2004. This would imply an upside of about 75%.

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Chart courtesy of StockCharts.com

My Bull Case for SWIR Stock

Sierra Wireless produces software and hardware that allow devices to communicate with each other. The company has a network that serves in excess of 100 million devices spread across over 80 networks and 130 countries.

What is intriguing is the acceleration in the IoT market. Artificial Intelligence (AI) will produce some amazing innovations in the years ahead, which will provide excellent tailwinds for SWIR stock.

Just think about the rapid development of autonomous vehicles, which is powered by IoT solutions.

Sierra Wireless announced some exciting news after German carmaker Volkswagen AG (OTCMKTS:VLKAY) said it would be using Sierra’s “AirPrime AR Series” modules and “Legato””platform to allow for 4G high-speed cellular connection in some of its vehicles starting in 2018. (Source: “Volkswagen Prefers Sierra Wireless to Enable Next-Generation Connected Vehicles With 4G LTE Embedded Modules,” Business Wire, February 9, 2017.)

With the Sierra Wireless solution on the Volkswagen “Car-Net” platform, the driver will be able to not only use the Internet, but also allow for critical automobile functions.

For Sierra Wireless, the possibilities are endless in the IoT segment.

“We expect that in the next five years, IoT will further penetrate several different industries and human activities, ranging from the home to the transportation industry, even affecting healthcare systems,” said a report by Visiongain. (Source: “Internet Of Things (IOT) Market Report 2017-2022,” MarketWatch, January 16, 2017.)

The global IoT market was $598.2 billion in 2015 and could ramp up to $724.2 billion in 2023. (Source: “IoT Market Forecasts,” Postscapes, last accessed February 16, 2017.)

While SWIR stock is small, with a market cap of around $830.0 million, the upside potential is huge, especially if Sierra Wireless can ride the IoT wave.