Are Echelon, Lantronix, and Control4 the Next Google-Nest Copycat Targets?

Consumer Electronics

Published: January 14, 2014 10:50 am

Last Updated: January 14, 2014 10:51 am

With Google Inc. (NASDAQ: GOOG) paying what feels like an unheard of $3.2 billion to acquire Nest Labs, Wall Street speculators are looking further down the chain to see if they can get in on the next home automation companies. That being said, investors are chasing up stocks in Echelon Corp. (NASDAQ: ELON), Lantronix Inc. (NASDAQ: LTRX) and Control4 Corp. (NASDAQ: CTRL) in relation to the deal.

24/7 Wall St. is highlight each of these companies as a result of the moves seen in them. But be warned that secondary and tertiary strategies are nothing new. They can end very badly because some companies are so small that the investing community does not know of them.

Echelon Corp. (NASDAQ: ELON) develops, markets and sells energy control networking solutions that enable devices like A/C, appliances, electricity meters, light switches, thermostats and valves to be interconnected. Echelon shares were up 27% at $2.89, on 13 times the normal volume of 1.2 million shares, in the first hour of trading on Tuesday. Shares hit a 52-week high, and the new 52-week trading range is $1.99 to $3.19. The stock’s market cap is $125 million after the pop, and 2012 revenue was $134 million. Note that analysts expect a drop of revenue to $83.7 million in 2014 from $85.85 million in 2013, according to Thomson Reuters.

Lantronix Inc. (NASDAQ: LTRX) designs, develops, markets and sells networking and communications products with a focus on the convergence of mobility with machine-to-machine systems. Lantronix shares were up 11% at $1.98, on five times normal volume of only about 200,000 shares, in the first hour of trading on Tuesday. The 52-week trading range is $1.31 to $2.48. The stock’s market cap is a tiny $30.3 million after the pop, and 2013 revenue was $46.6 million. This company has only one analyst making estimates, and those sales expectations are $45.5 million this year and $51.2 million next year.

Control4 Corp. (NASDAQ: CTRL) is into automation and control solutions for the connected home. It offers the Control4 Home Operating System that is embed in a range of its products that interact with various music, video, lighting, temperature, security, communications and other devices. This stock was up 26% at $23.38, on four times normal volume of 230,000 shares, against a 52-week range of $13.77 to $24.00. Its market cap is $532 million, and this company is at least now profitable. Sales for 2012 were $123.4 million, and expectations from analysts call for $128.5 million in 2013 and $150.3 million for 2014.

Google bought Nest Labs because it was an easy deal to do. Nest has started selling its products and systems at Home Depot, and Google obviously plans to integrate things far beyond its thermostat and smoke/CO detection systems.

Does the value of these rise if Google bought the VC-backed Nest for a whopping $3.2 billion? In relative terms, yes. Will these be the next buyouts from Google peers? That remains to be seen.

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