Tech stocks have been volatile lately, but there are a number of new secular trends which investors are looking to remain exposed to in the long-term. Of these, easily the most exciting for certain semiconductor companies, gadget makers, and telecom firms is the Internet of Things.

For those that don’t know, the Internet of Things is the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.

For example, consumer-level IoT products include things like Amazon’s Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.

The obvious play here for investors is semiconductor stocks, as chipmakers should be able to benefit from the growth of connected devices. But chip stocks have been volatile lately. Wall Street is projecting an end to the extended cycle of strength for the industry, and investors are worried about headwinds such as demand and pricing.

Still, there is room for niche semiconductor firms to maintain their growth as the Internet of Things continues to blossom. And there are other ways to profit from IoT growth by maintaining a focus on other pieces of the technology that helps the network function.

With that said, we’ve found three stocks which have been flagged by the Zacks Rank that could be poised for further IoT growth soon.

1. SMART Global Holdings, Inc.

SMART Global is a specialty designer of memory solutions. The firm has an impressive book of over 250 clients from around the world—most of them major OEMs. SMART just reported another impressive beat-and-raise quarter a few weeks ago, and although much of its recent success is owed to wins on the server side, it certainly has exposure to IoT applications.

Notably, SMART serves IoT-adjacent industries like automotive and cloud computing. The stock is currently sporting a Zacks Rank #2 (Buy) and trades at a measly 4.3x earnings. As Zacks Strategist Kevin Cook pointed out in a recent “Bull of the Day” profile for Smart, this low valuation is modeled similarly to memory peer Micron—but that should not really be the case.

Indeed, SMART uses memory tech which is less susceptible to price fluctuations, something that has kept Micron at bay recently. Moreover, the company is looking at a projected long-term earnings growth rate of 15%, suggesting that its expansion should continue strongly in the future.

2. Vishay Intertechnology, Inc.

Vishay Intertechnology is a global manufacturer and supplier of discrete semiconductors. The company has a broad portfolio of unique passive and active solutions that are tailored to the “things” being controlled in the IoT. Vishay markets its portfolio to manufacturers of everything from biometric monitoring systems to fitbands and smart appliances.

VSH is currently a Zacks Rank #2 (Buy). The stock is solid growth option, with earnings and revenue expected to improve by 40% and 16%, respectively, this year. But VSH is also reasonably priced, and the stock’s P/E of 9.4 and PEG of 1.0 show that investors are getting a great bargain on its current outlook.

The stock has been sluggish in the wake of the aforementioned industry volatility, but it has bounced off its 52-week low. In the past year, it has found support near the $17.50 level. This is where shares bounced from after the market-wide selloff, and if that can hold, there should be even more upside potential.

3. Verizon Communications Inc.

Just as the chip stocks offer an opportunity to buy the hardware that enables the Internet of Things, telecom companies give investors a chance to own a piece of the network that brings it all together.

Verizon is the perfect play because of its head start in launching 5G data networks. The term “5G” is short for “5th generation mobile networks,” and it refers to the telecommunications standards that will eventually replace the current 4G standards. 4G was all about human-to-human communication, but the 5G standard was created with IoT and smart city communication in mind.

Verizon launched the first consumer 5G network earlier this year. It also has one of the more exciting growth opportunities among the major telecoms, and the stock is still relatively cheap at just 12.6x earnings. Income investors also love its 4.1% dividend yield.

Bottom Line

The Internet of Things is one of the most exciting emerging tech markets in the world.  And while these specific products are interesting, the real moneymakers in these situations are the companies that are building the tech that powers these products.

The best way for investors to cash in on this growing trend is to identify companies that are not only investing in the Internet of Things, but are also displaying solid fundamentals and impressive Zacks metrics.

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