Semiconductor stocks have been struggling to generate positive momentum recently, but there are a number of new secular trends which investors are looking to remain exposed to in the long-term. Of these, easily the most exciting for certain niche chipmakers is the Internet of Things.

For those that don’t know, the Internet of Things is the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.

For example, consumer-level IoT products include things like Amazon’s (AMZN - Free Report) Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.

As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. The volatility we are seeing in chipmakers right now comes from Wall Street’s efforts to call an end to an extended cycle of strength for the cycle, but over time, we could see IoT-focused semiconductor firms maintain their growth as the number of connected devices worldwide continues to expand rapidly.

With that said, we’ve found three stocks which have been flagged by the Zacks Rank that could be poised for further IoT growth soon.

1. SMART Global Holdings, Inc. (SGH - Free Report)

SMART Global is a specialty designer of memory solutions. The firm has an impressive book of over 250 clients from around the world—most of the major OEMs. SMART just reported another impressive beat-and-raise quarter a few weeks ago, and although much of its recent success is owed to wins on the server side, it certainly has exposure to IoT applications.

Notably, SMART serves IoT-adjacent industries like automotive and cloud computing. The stock is currently sporting a Zacks Rank #2 (Buy) and trades at a measly 4.6x earnings. As Zacks Strategist Kevin Cook pointed out in a recent “Bull of the Day” profile for Smart, this low valuation is modeled similarly to memory peer Micron (MU - Free Report) —but that should not really be the case.

Indeed, SMART uses memory tech which is less susceptible to price fluctuations, something that has kept Micron at bay recently. Moreover, the company is looking at a projected long-term earnings growth rate of 15%, suggesting that its expansion should continue strongly in the future.

2. Vishay Intertechnology, Inc. (VSH - Free Report)

Vishay Intertechnology is a global manufacturer and supplier of discrete semiconductors. The company has a broad portfolio of unique passive and active solutions that are tailored to the “things” being controlled in the IoT. Vishay markets its portfolio to manufacturers of everything from biometric monitoring systems to fit bands and smart appliances.

VSH is currently a Zacks Rank #1 (Strong Buy). The stock is solid growth option, with earnings and revenue expected to improve by 40% and 16%, respectively, this year. But VSH is also reasonably priced, and the stock’s P/E of 9.6 and PEG of 1.1 show that investors are getting a great bargain on its current outlook.

The stock has been sluggish in the wake of the aforementioned industry volatility, but investors should keep an eye on the $18 level as a key point of support. This is where shares bounced from after the market-wide selloff, and if that can hold, there should be some upside potential.

3. Semtech Corporation (SMTC - Free Report)

Semtech is a supplier of analog and mixed-signal semiconductors for high-end consumer, enterprise, industrial, and communications computing. The firm has developed its own LoRa (long range) technology, which provides a long range, low power wireless platform that is perfect for IoT applications.

In fact, Semtech claims its LoRa platform has amassed over 600 known uses in the broader IoT ecosystem and now connections more than 50 million devices worldwide. Meanwhile, the stock is sporting a Zacks Rank #1 (Strong Buy) and is projected to see full-year earnings growth of 19%.

Bottom Line

The Internet of Things is one of the most exciting emerging tech markets in the world. And while these specific products are interesting, the real moneymakers in these situations are the companies that are building the tech that powers these products.

The best way for investors to cash in on this growing trend is to identify companies that are not only investing in the Internet of Things but are also displaying solid fundamentals and impressive Zacks metrics.