Wearable Tech Stocks to Consider Investing In
The wearable market has taken a bit of a drubbing over recent months, with some standard-bearers of the industry like GoPro Inc (NASDAQ:GPRO) and Fitbit Inc (NYSE:FIT) hitting tough times in the market in 2016. But that doesn’t mean there aren’t still some top wearable technology companies out there.
Garmin Ltd. (NASDAQ:GRMN) is the leading wearable tech stock in 2017, at least so far, and when compared to other top names in the market. And while the wearable market has struggled to find its footing in recent quarters, Garmin’s foray into the sector has proved to be a great move.
There was a time, after all, when wearables were seen as the next big thing in the tech market. Many were eager to invest in wearable tech, and companies like Fitbit and GoPro saw massive early gains following their initial public offerings (IPOs), only to slump, following weak sales and growth numbers. But their current fall in share prices might make them some of the best wearable tech companies to invest in, if you believe that their falls are aberrations.
And there are new players entering the industry in 2017. Companies who formerly had no connection to the wearable market are increasingly exploring different products that will drop them squarely in the market, speaking again to the value in the wearable tech world, even if the recent past performances of some of the top wearable technology companies haven’t been stellar.
But there are reasons to be excited, as wearables may be reinvigorated by emerging technologies like augmented reality, (AR) e-commerce and the Internet of Things (IoT). With wearables facilitating e-payments at an ever-increasing rate, IoT figuring to become a dominant tech in the near future, and AR boosting wearable tech potential, you have a number of sister technologies that increase the draw to invest in wearable tech.
Wearable Tech Companies List
With the current state of affairs in the wearable tech market covered, let’s get on to my picks for the top wearable technology companies in 2017.
|Top Wearable Tech Stocks||Ticker|
|1. Garmin Ltd.||GRMN|
|2. Nike Inc||NKE|
|3. GoPro Inc||GPRO|
1. Garmin Ltd. (NASDAQ:GRMN)
No surprise here, seeing as how I mentioned right off the bat that Garmin Ltd. (NASDAQ:GRMN) is the leading wearable tech stock.
Garmin is an outlier in the sector for a number of different reasons, but here’s the most important to investors: GRMN stock is going in the right direction.
The company is up over 10% in 2017 and 31% over the past 12 months. Of course, Garmin doesn’t only deal in wearables, but the company’s new focus on smart watches and fitness trackers has paid off.
It’s not well known that Garmin actually got into the fitness wearables space before Fitbit. Way back in the dark ages of 2003. Fitbit came along a few years later and promptly dominated the market, but that’s not the whole story. As mentioned above, while Fitbit has faced a downturn in recent quarters (down 61% in the past 12 months), Garmin has only been plodding ever upward.
Fitbit’s fourth-quarter results showed its first decline in revenue and unit sales on a year-over-year basis, and that trend is likely to continue. Garmin, meanwhile, reported a 20% jump in revenue for its fitness category over the same time. Its high-end “Fenix” smartwatch was also mentioned as a boon to the company that helped propel outdoor segment revenue up 46% compared to the previous year. (Source: “Garmin Maps a Solid Path in Wearable Tech,” The Wall Street Journal, February 22, 2017.)
It’s a bit like the “Tortoise and the Hare” parable. Fitbit ran itself out of gas with huge growth, but an inability to sustain that pace. Garmin elected to use the slow-and-steady model to build off its already reputable brand name in car GPS technology to help promote sales.
GRMN stock has also managed to appeal to a different class of consumers, with its products averaging a selling price about 71% higher than Fitbit for the 12-month period ended September 2016.
And it’s looking like the company will stay on track in 2017. Its fourth-quarter earnings call had the company projecting outdoor and fitness segments to boost revenue by 10% and five percent, respectively.
In a world where wearable tech companies have proved anything but reliable over the past year or so, Garmin is situating itself as the premier wearable company to invest in for 2017.
2. Nike Inc (NYSE:NKE)
The future is here: self-tying shoes. No, this isn’t Back to the Future; this is real life. If you’ve ever felt constrained by the oppressive demands of laced shoes, Nike Inc (NYSE:NKE) has your solution.
This company has introduced the “HyperAdapt” self-lacing shoe; a foot-shaped emancipation from the shackles of shoelaces. Of course, you’re not going get your entry to the future on the cheap, as the new footwear will cost you $720.00. For a pair of running shoes. Shoes you never have to tie, mind you, but still, running shoes.
But further down the pipeline (and hopefully more affordable), Nike was granted a patent filed in 2016 on the development of a smart running shoe.
The new shoe would be able to monitor the wearer’s vitals and share the information wirelessly via Bluetooth. The shoe would also share real-time information on movement and performance, which, in the world of sports analytics, could be a game changer. (Source: “Nike’s Next Shoe May Track Performance (NKE),” Investopedia, February 15, 2017.)
While Nike may not be seen as a technology company, the athletics product maker is increasingly looking to expand its horizons by focusing on wearables. With these developments, the company has cemented itself as one of the wearable tech stocks to keep an eye on.
And what separates Nike (much like Garmin) from the other top wearable tech companies is the safety that having multiple channels of revenue provides. After all, there’s only so many Fitbit trackers a single consumer will need, which puts a lot of eggs in one basket. The results, we’ve seen, haven’t been pretty.
And Nike is already off to a good start this year. The company is up nearly 14% since the beginning of 2017, though it is down four percent over the past 12 months.
Another bonus is that Nike pays a dividend, so that’s another little piece of insurance that other, newer companies simply can’t provide.
And don’t forget that Nike was actually a pioneer in the wrist-mounted athletic trackers market that Fitbit came to dominate. Of course, the “Nike FuelBand” was later killed out by the competition, but the marketing campaign that Nike orchestrated around the wristband was huge.
Nothing propelled the craze of fitness trackers more than seeing LeBron James and Serena Williams dominate their respective sports, all while monitoring biometrics in real-time via Nike’s tech. (Source: “Nike FuelBand: The rise and fall of the wearable that started it all,” Wareable, February 22, 2017.)
3. GoPro Inc (NASDAQ:GPRO)
Bear with me on this one.
GoPro Inc (NASDAQ:GPRO) has not had a good run of things recently. Over the past 12 months, the company has fallen over 20%. Since its July 2014 IPO, GoPro stock has plummeted by 73%. There’s more than a few reasons to be wary of GPRO stock as a solid investment in the field of wearable tech stocks.
The last two quarters have seen the company underperform against estimates, leading to drops like the near-13% tumble that the company experienced on February 3, following its most recent earnings report. (Source: “GoPro stock plunges following two downgrades and weak sales,” MarketWatch, February 3, 2017.)
All is not well in the land of GoPro; that is obvious enough. But where some analysts see a tanking stock, others see potential.
Take, for instance, that the company is up over 10% since the start of the new year despite the 13% drop. And that GoPro has increasingly looked into new ways to expand beyond wearables, like the introduction of consumer drones.
While the drones have yet to pan out, it’s a good sign that the company isn’t sticking to its laurels and is trying to find ways to subsidize its bottom line for when the wearable market slows down. After all, there’s only so many helmet-mounted camera-buyers out there that can be relied upon to buy a “GoPro” year after year. The key to the company’s strategy is how to wait out the slower periods until the purchasers decide to upgrade, or enough new users flock to the company.
It’s also important to note that the company’s profit margins improved during the last earnings report, as well as the earnings per share jumped to $0.29, beating estimates by $0.07. The losses of $115.7 million could also largely be attributed to a tax charge of $102.0 million. Quarterly revenue also jumped up by 24%. (Source: “Why GoPro Inc (GPRO) Stock Deserves More Patience,” InvestorPlace, February 6, 2017.)
GoPro is by no means a sure thing (what stock is?) and carries with it the most risk of the three companies mentioned above, but what it lacks in stability, it makes up for in potential rewards. After all, the volatility of GPRO stock is significantly higher, with possible high gains at the expense of potentially deep losses.
Ultimately, it’s up to you, the investor, to choose which stock more fits your style.
Top Wearable Tech Stocks 2017
With this knowledge in hand, you have what I consider to be three of the top wearable technology companies for 2017. If you’re looking for wearable tech companies to invest in, you could do a lot worse than Garmin, Nike, and GoPro.