InvenSense Inc. Is a Good Fit for the Burgeoning Health Revolution

With the announcement of Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  )  Fit, the revolution of health care monitoring and recording is in full force. This news comes within a month of Apple (NASDAQ: AAPL  ) touting the new Health app and HealthFit developer's tool. The goal of both services is to become the central hub of a myriad of apps and wearable sensors that measure health and fitness activities.

With the two tech giants battling it out for consumers' health data and the focus of developers, the one stock that appears best-situated to benefit from the proliferation of sensors in these new devices is InvenSense (NYSE: INVN  ) . Remember that Google, at a market valuation of $390 billion, is the smallest of those tech giants, making it very difficult for a health hub to change the value of the related stocks. On the other hand, InvenSense sits with a valuation just below $2 billion, and the advancement of sensors in medical and fitness devices will greatly move the needle for this small company.

InvenSense potential
Each new device, whether fitness or health-related, will need more complex sensors to measure and track user movements and record the medical implications. The most notable producer of sensors is InvenSense, which ironically got a price target bump from Pacific Crest on the expectation that the company has finally landed a deal to provide sensors for the iPhone (and possibly even the still-rumored iWatch). The sensor maker most notably hasn't obtained Apple as a customer.

The maker of motion-tracking sensors already works with Google and Samsung (NASDAQOTH: SSNLF  ) , including Samsung's Gear products, so it is already positioned for the oncoming wearable revolution. If these new health apps can increase demand for sensors produced by InvenSense, the company might become the clear winner in the arms race of the tech giants.

With a market cap of $2 billion, and revenue only expected to reach $325 million this year, the stock isn't cheap. InvenSense is already solidly profitable, so it offers some stability trading at only about 30 times earnings estimates of $0.71. The company obtained roughly 85% of revenue from smartphones and tablets, so the development of another revenue source could greatly increase the potential market size.

Sensor revolution
While Apple is working with the Mayo Clinic on the health app, Google announced several apps that already integrate with the platform, including Nike+, Adidas, and Mio, which makes a wristband with an integrated heart rate monitor.

For its part, InvenSense recently released a sensor capable of measuring swing motion of both a tennis racket and golf club. The company has even incorporated one into a soccer ball to measure flight and distance. The sensor reportedly offers the smallest size, lowest power, and lowest profile, making it ideal for sports and fitness applications.  The company also already has sensors in Google and Samsung products, including in the new wearable devices from Samsung, the Gear 2 and Gear Fit.

Bottom line
The one company that might benefit the most from an arms race between Apple and Google is the maker of motion sensors capable of tracking fitness moves and even a golf swing. InvenSense isn't overly cheap, but at a valuation of only $2 billion, the fitness and health trade has the potential to move the needle for this tech company.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (0) | Recommend This Article (5)

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.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3011258, ~/Articles/ArticleHandler.aspx, 9/21/2014 10:31:11 PM

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