For both his conservative and more speculative favorites for 2014, Jim Powell, editor of Global Changes & Opportunities Report, turns to the growing market for home security systems.
As my top pick for the coming year, I like the long-term outlook for ADT Corporation (ADT), a major home security company that was spun-off from Tyco International last year.
I think the company is ideally situated to benefit from two profitable trends that are already in motion: 1) Americans are increasingly concerned about protecting themselves and their families from crime, and 2) home sales are rebounding, and so is new home construction.
In the latter case, many buyers want houses that are prewired for security systems. Meanwhile, part of the company's revenue comes from ongoing monthly fees for monitoring services.
ADT is now adding remote access features to its systems that allow customers to adjust thermostats, unlock doors, keep tabs on children and pets, and so on, using live video feeds to smartphones and tablets. I think the video systems will be extremely popular.
ADT is also growing by acquisition. In July, the company acquired Devcon and its 117,000 customers. ADT's profits have been rising, and should continue to do so.
A more speculative idea, and a companion stock to ADT, I recommend Napco Security Technologies (NSSC). The company supplies security systems, primarily to commercial, institutional, industrial, and government customers.
The company's products include access controls, personal ID systems, password and keypad locks, video surveillance, intrusion detectors, fire monitors, and other security products that are used throughout the world.
In the wake of several mass shootings, Napco is finding a great deal of interest in its panic button technology, that uses electronic key chains and pendants to summon help in an emergency.
The personal alarm system also permits responders to quickly locate people who need assistance. As with ADT, I think Napco has the right products for an expanding market.
