If your home isn’t already equipped with smart home features, it will be soon.
The ability to control lights, locks, thermostats, and entertainment from your smartphone or dedicated touchscreen interface is now a reality.
And investing in the companies that make it possible could make you rich.
According to a report by Market Research Engine last summer, the global smart home market will grow from $4.41 billion in 2013 to $25 billion in 2021.
That’s a 467% rise in just eight years.
Recognizing that profit potential, plenty of companies have rushed into this sector in recent years. That includes a lot of the big tech names you already know.
But if you really want a piece of this exploding industry, you’ll want to grab a “pure play” on smart home technology. That is, a company that focuses entirely on connected home equipment and installation. The company we have for you today is going to get the lion’s share of the benefits as this sector takes off.
In fact, our pick today was the first smart home pure play ever to go public.
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This company is an industry leader in each and every subcategory of home automation and can provide turnkey installation to homeowners at any price point, from starter packages to luxury setups.
In spite of consistent earnings beats, solid growth in both revenue and earnings, plenty of cash on hand, and not a penny of debt, the stock price took a hit during the market shakeup in late 2018.
That means it’s a great deal if you grab it right now.
That’s not just a subjective assessment. This stock also has a top score from our Money Morning Stock VQScore™ system.
Between industry growth, rock-solid fundamentals, and a bargain price, this stock is a perfect storm of profits you’ll want to get a piece of as soon as you can.
This Industry Leader Is Set to Become the Most Recognized Name Brand in Smart Home Technology
After a decade in business, Control4 Corp. (NASDAQ: CTRL) went public in 2013, bringing the smart home revolution to the stock market for the first time.
Already part of the S&P 600, the Salt Lake City–based company has 640 employees in U.S. cities like San Jose, Chicago, and Charlotte, as well as in the UK, India, and China.
By now Control4 has equipped 380,000 homes and businesses with smart features.
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Using its proprietary Simple Device Discovery Protocol (SDDP), Control4 can work with whatever hardware the customer prefers. It doesn’t matter if it’s Alphabet Inc.’s (NASDAQ: GOOGL) Google Nest, Sonos Inc. (NASDAQ: SONO) speakers, or an ADT Inc. (NYSE: ADT) security system.
All of them – and 12,500 other third-party products – integrate seamlessly into Control4’s interface.
For those looking for the next level of smart home convenience, though, Control4’s proprietary products are among the best in the business.
With a fully-equipped Control4 system, a simple touch of a “Goodbye” button will turn off lights, lock doors, and set the alarm. Likewise, “Good morning” and “Good night” buttons will adjust settings across the entire house according to the user’s preferences.
A consultation with a Control4 representative can lead to all kinds of customizations, all made as simple as the touch of a button so even the least tech-savvy customers will have no problem using the system.
This past holiday season, Control4 customers were even treated to seasonally-appropriate presets to choose from. Hitting the “Yuletide Party” setting, for example, would light up a Christmas tree, turn on a gas fireplace, fill the house with holiday music, and light up the front pathway outside.
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Electronics trade magazine CE Pro ranked Control4 No. 1 overall for home automation providers, and ranked it either No. 1 or No. 2 in six different subcategories. The publication has also given the company its Quest for Quality award for nine different aspects of its business, including its general service and technical support.
But Control4 is not stopping there. Gearing up for the growing demand in smart home technology, the company is unveiling 162 showrooms across the United States, Canada, the UK, China, and Australia.
Customers will be able to visit these showrooms and take the full Control4 experience for a test run before they spend a penny.
This move represents a big step toward establishing Control4 as smart home technology’s most recognizable brand name, ensuring mega profits to come.
And all that’s before we see how strong its numbers are.
Now Is the Time to Buy CTRL
After trading over $37 in early September, CTRL shares are now down around $18.
That drop represents a big mistake by the market.
Even Wall Street agrees. Seven out of nine analysts tracked by FactSet rate CTRL a “Buy” or “Overweight.” Their average price target would represent more than an 80% climb from the stock’s current price.
A look at Control4’s fundamentals reveals just how much value the stock market left on the table.
Revenue has been climbing steadily, from $109.5 million in 2013 to $244 million in 2017. And the first nine months of 2018 brought in 13.6% more than the same period the year before.
Earnings per share (EPS) has climbed 333% since 2015. According to FactSet, that is projected to grow another 54% by 2021. But Control4 is coming off 11 straight quarters of earnings beats, and sometimes by stunning amounts. EPS for the first quarter of 2017, for example, came in more than 250% higher than consensus estimates.
The company’s cash flow has been rising steadily too, with free cash flow rising from just $640,000 in 2015 to nearly $30 million over the 12-month period ending in September.
In total, Control4 now has $91 million in cash on hand – and zero debt. That puts it in fantastic shape to make some key acquisitions in the coming years that could further cement its leadership in this growing sector.
On top of that, just about every valuation you can think of suggests CTRL is undervalued. Its price-to-book ratio suggests that it’s at a 15% discount compared to the rest of the industry, and its forward price/earnings ratio puts it at a 30% discount.
No matter how you look at it, Control4 is the top pure play you can make in one of the biggest emerging industries in tech.
After you pick up your shares, you’ll probably want to look into buying some of its products too – if you haven’t already.
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