Sierra Wireless, Inc. (TSX:SW)(NASDAQ:SWIR) helps connect devices to the cloud and is a key player in the Internet of Things (IoT) industry.
Its future looks strong as there’s more of a push towards more connectivity and more Internet-enabled devices. It’s versatile in that it serves a variety of different industries, from enabling companies to track their fleet, medical devices to transmit data, or to making cities smarter with more data on public transit. There are many applications for IoT where Sierra can add value.
Today, Sierra’s share price is up over 30% since the start of 2020, outperforming the TSX (down 2%) by a wide margin. The stock got a big boost in July when the company announced that it was divesting of its automotive embedded module product line, which is based in China.
Although the deal was worth just $165 million U.S., the important takeaway for investors was that the company would be focusing more on its high-value recurring revenue. The segment was lower in margin and that should help improve the company’s financials.
In the company’s second-quarter results, released on August 6, Sierra’s sales of $144.1 million U.S. were down 24.7% year over year as it wasn’t immune the impact of COVID-19 and businesses cutting back on spending. However, the company’s CEO and President Kent Thexton said that the results met our expectations and we are cautiously optimistic about the second half of the year as we are seeing some business improvements as we prepare for an upcoming launch of our new 5G embedded modules and routers.
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Sierra could be a solid long-term buy, especially as business move more toward the cloud and 5G.
Tech Insider
