Growing Wearables Industry Holds These Stocks in Good Stead

growing wearables industry holds these stocks in good stead

Wearables industry set to grow on the back of technological advancement, ease of use, efficiency and flexibility.

Increasing use of technology in healthcare and payments industries have rasied the appeal for wearables. Growing health awareness, intertwined with technology and the curiosity to monitor health at each step, has fueled demand for wearables, yet another kind of health monitoring device.

Similarly, the ease, flexibility and security of payments provided by wearables make them a popularly mode of payment. Naturally, these are gaining ground in the payments industry.

Wearables in Healthcare

Wearables are gaining prominence, as people are increasingly turning to these artificial-intelligence backed smart devices that focus on health and fitness. Wearables available in the market range from smart watches to fitness and wellness devices, smart glasses, fitness bands and smart clothing among others. These devices track blood pressure, the number of steps walked, heart rate and hours of sleep to name a few, naturally gaining popularity among the health conscious.

Per Allied Market Research, the wearable technology market in 2015 was valued at $19,633 million, at a CAGR of 16.2% to reach $57,653 million by 2022. These devices find favor due to factors such as ease of use, flexibility and convenience. Moreover, these provide real time data monitoring, operational efficiency and fitness tracking, which further support market growth.

Also, wearables come in handy to track fitness and post-operative care of patients within a short span of time. Doctors are using wearables to keep track of patients’ health. Moreover, smart wearable sensors not only help in health monitoring but also in data analysis.

Wearables in Payments

Paying with wearables, including smart watches, fitness trackers and payment wristbands, is the next big thing in Internet of Things. Payment volume via wearables is expected to grow to $501.1 billion, approximately 20% of all proximity payments, by 2020. Wearable payment systems utilize near field communication, radio frequency identification, contactless point of sale terminals or quick response codes and barcodes to successfully make payments.

The most common payment devices available are Apple Watch, Samsung’s Gear S2 smartwatches (Samsung Pay) and Jawbone’s fitness tracking wristband, the UP4.  

Growth Estimates

According to the IDC report, the size of the global wearables market will practically double between 2017 and 2021, rising from 113.3 million units sold to 222.3 million, with an average annual growth rate of 18.4%. IDC predicts that, smartwatches, which have a much wider array of functions, will grow during the same period, at an average rate of 27% for the models that offer basic functionalities and 22% for the most technologically advanced ones. It also preditcs that the popularity of intelligent wristbands will wane over time.

Still a Nascent Industry

Though there are a number of devices, those that have an array of functions in the most efficient manner will reign. This calls for continuous innovation on the part of the companies manufacturing wearable devices to make their products sophisticated and more productive, thus enhancing their appeal to customers.

This industry is in its growth stage and demand for its products is quite elastic. Moreover, their high price tag along with no immediate benefits makes these fall under the luxury line of items.

Stocks Set to Gain

Nevertheless, going ahead, growing awareness about the benefits of wearables and technological advancement are expected to drive this market. These are some of the stocks that are enjoying business growth in this industry and are set to gain.

Apple Inc. AAPL with a Zacks Rank #1 (Strong Buy)  is no doubt the frontrunner in the wearable technology market, with its Apple Watch gaining huge prominence. Built on the foundation of HealthKit and Health, the device enables users to track their health metrics as well as share that data with their physicians.

The growing popularity of this device is evident from the third-quarter fiscal 2018 results, wherein revenues from Apple Watch grew in the mid 40% range. Management notes that the wearables business is now the size of a Fortune 300 company.

Per a recent report by IDC, Apple WatchOS is expected to lead with 20.2 million shipments, representing 16.2% market share in 2018. The market share is expected to go up to 17.3% by 2022. You can see the complete list of today’s Zacks #1 Rank stocks here.

In a year’s time the sock has grown 40% performing in line with the industry.

Fitbit, Inc. FIT, having a Zacks Rank #3 (Hold), is firing on all cylinders to bolster the presence in the wearables and fitness world on the back of its robust technologies and innovative products.

Recently, the company unveiled its latest and advanced wearable called Charge 3, which features its advanced algorithm technology and extended battery life of up to seven days. Moreover, Fitbit’s popularity among teenagers is also on the rise. Per an April survey by Piper Jaffray, Fitbit enjoyed 71% of their vote as their favorite fitness band, while Apple garnered 10%.

In a year’s time the sock has gained 2.6% compared with the industry’s growth of     47%.

Garmin Ltd. GRMN with a Zacks Rank #2 (Buy) has gradually built the product portfolio for its fitness business, through both internal development efforts and acquisitions.

Strength in this segment continues to be driven by focus on location-enabled wearables and growing engagement on the Connect IQ App store.
There is recent news that wearables data such as steps, distance, stress levels, heart rate and sleep can now be used by third-party developers. The company is bringing Health Companion SDK for Android and Apple devices.

In a year’s time the sock has gained 32% compared with the industry’s growth of  12%.

Fossil  Group Inc.’s FOSL wearable category has helped the company to maintain its position in the market. Furthermore, Fossil is benefiting from Android’s popularity and Google’s technology in its watches. The company recently launched approximately 14 new hybrid and smartwatches across several brands. In the second quarter of 2018, connected watch sales surged 91% year over year. Also, wearables represented roughly 20% of the company’s total watch sales. Strength in wearables drove online sales, ultimately leading to a 25% rise in the company’s global retail comps.

The company with a Zacks Rank #3 (Hold) expects the wearables business to grow by $32 million by 2020. Additionally, it intends to add three new smartwatch formats in 2018, with a view to enhance Fossil’s portfolio.

The stock has risen 167% in a year’s time outperforming the industry’s growth of  41%.

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