United Technologies Should Acquire This Rule Breaker Before It's Too Late

Why isn't United Technologies (NYSE: UTX  ) playing in the smart-home market? NextMarket Insights pegs the opportunity rising from under $2 billion last year to more than $10.9 billion by 2017.

Mostly that number describes spending on home automation systems from telecom and cable providers. But with apps governing so much of our lives, it seems only a matter of time before the "smart home" market includes any sort of intelligent gear that makes it easier to keep up with the house. You might even argue we're already there: Home Depot and Lowe's each offer a variety of purported "smart home" electronics via their online storefronts.

Enter Nest Labs. The privately held maker of precisely this sort of gear -- including a well-received learning thermostat -- just introduced a combination smoke and carbon monoxide detector that's easily governed via apps:

The Nest smoke and carbon monoxide alarm. Sources: Nest Labs, YouTube.

As a homeowner, I'm thrilled by what Nest is doing. As an investor, there isn't much I can do to cash in on the company's progress. (Not till it comes public via IPO, anyway.) Unless, of course, someone were to make a rich enough bid to acquire Nest. United Technologies should be that company.

Why? Growth and adjacency. United Technologies already offers all sorts of industrial gear for automating and securing commercial buildings. Would creating a "smart home" unit with Nest at the centerpiece really be so bad? The greatest risk to the company, I think, would be ranging outside its circle of competence to develop a service team for residential installations and maintenance. But even that shouldn't be too much of a problem when Nest already has a database of pros certified on its gear available through its website.

We're also talking about seizing a market that's in the midst of multibagger growth. And United Technologies, which has juiced revenue by just 1.2% on average over the past five years, could use the catalyst. Think I'm wrong? Have a better idea? Tell us all about it in the comments box below.

9 more wealth-making stock ideas for you to seize now
Of all the attributes that make United Technologies stock attractive, its 2.2% yielding dividend might be the prettiest. But there are even better ideas out there. I know because our analysts recently identified 9 rock-solid dividend stocks you need to know about. Ready to learn more? Download this valuable free report by simply clicking here now.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2686889, ~/Articles/ArticleHandler.aspx, 4/24/2014 6:12:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement