The trend of staying fit is quickly catching on, thereby increasing the demand for smart wearable devices like smartwatches. The smartwatches allow users to keep a track of their fitness levels, be it monitoring the number of calories burnt in a day or the hours of sleep they are getting. Users can also quickly check their heart rate as many smartwatches are equipped with heart rate monitors. The demand for smartwatches grew further when the coronavirus broke out last year as consumers wanted to keep a track of their health statistics.

The emergence of technologies such as the Internet of Things (“IoT”) has also helped smartwatches in becoming beneficial. With the help of IoT, smartwatches collect data from the user and share them with a smartphone or any other connected device, making it even more convenient for users. Owing to the synchronization with smartphones, smartwatches are also allowing users to stay up to date with their notifications. If a notification arrives when they are traveling, users can simply glance through it on their smartwatch, without having to take their smartphone out of their pockets. In fact, smartwatches are also capable of making calls and sending messages when they are paired with a smartphone. Some smartwatches can also make calls and perform other tasks over a cellular or Wi-Fi network, even when the smartphone is not nearby.

Reflective of the positive developments that smartwatches are witnessing, it is only expected that the market will grow going forward with more people adopting this emerging technology. Per a report by Mordor Intelligence, the smartwatch market is estimated to witness a CAGR of 14.5% from 2021 to 2026. 2021 has already started on a positive note for smartwatches as Counterpoint Research stated in a report that global smartwatch shipments in the first quarter of 2021 jumped 35% year over year.

3 Stocks to Watch Out For

The booming popularity of smartwatches should sustain owing to the many conveniences these offer. This seems then as an opportune moment to take a look at companies that stand to benefit from this growing trend. We have selected three such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Garmin Ltd.’s GRMN Fitness segment offers smartwatch devices, among other products. The company’s Connect IQ App Store is also providing its smartwatch users with more options like watch faces, music streaming and others. Garmin also recently launched its latest Descent Mk2S, a diving-focused watch aimed especially at female customers.

Shares of Garmin have gained 28.1% year to date and it currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 1.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 4.3%.

Apple Inc. AAPL has been at the forefront of the booming demand for smartwatches with its Wearables segment offering products such as the latest Apple Watch Series 6. Apple also recently previewed its watchOS 8, which brings more conveniences to users, especially on its Home and Wallet apps.

Shares of Apple have gained 12.3% year to date and it currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 1.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 58.2%.

Alphabet Inc.’s GOOGL Google is looking to make significant in-roads into the smart wearable market as it recently completed the acquisition of Fitbit, the fitness and smartwatch brand, for around $2.1 billion. Google also recently announced that it is combining its Wear OS with Samsung’s Tizen for creating a unified wearable platform.

Shares of Alphabet have gained nearly 53% year to date and it currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased nearly 1% over the past 60 days. The company’s expected earnings growth rate for the current year is 53.8%.

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