Home security company ADT (NYSE: ADT) announced Monday that it sold 6.6% of its equity to Alphabet’s (NSDQ: GOOGL) Google division for $450 million. That morning, shares of ADT doubled in value before pulling pack to finish the day up nearly 60%.

In a moment, I’ll show you another company that could be next to make a deal. But first, let’s take a quick look at why ADT felt compelled to lock up a partnership with Google.

For the past couple of years, fantastic claims have been made about how the Internet of Things (IoT) will change our lives for the better. Until now, there hasn’t been much meat to go along with all that sizzle. For all its promise, the IoT has been slow to deliver stock market winners on Wall Street.

In this case, the deal with Google was a lifesaver for ADT. Until a few days ago, ADT had been on a downward trajectory since going public in January 2018 at $14 a share. Four months ago, it bottomed out beneath $4.

Bear in mind, Alphabet has a market cap of $1 trillion and holds more than $100 billion in cash. Before this deal was made, ADT was worth about $7 billion. If it wanted to, Google could have bought ADT outright without blinking an eye.

But that’s not what Google wants. It only needs access to ADT’s enormous base of installed home security systems. That will allow Google to market its family of “Nest” connected home hardware to ADT’s customer base.

The Nest product family includes thermostats, doorbells, and smoke alarms. Adding ADT to the lineup immediately expands Google’s market share. This arrangement also will provide Google with valuable data regarding the security habits of its users.

Sounding the Alarm

The immediate loser from this development is Alarm.com Holdings (NSDQ: ALRM), which generates about a fifth of its revenue from ADT. Presumably, that business will transfer over to Google when those contracts expire in 2022. Shares of ALRM immediately fell 20% when the Google/ADT partnership was announced.

That drop pushed Alarm.com’s market cap beneath $3 billion. If Google has a competitor that also wants in on the home security market, buying a piece Alarm.com while it is down would be an inexpensive way to do it. Google does have a competitor, and its name is Apple (NSDQ: APPL). Apple offers a similar suite of IoT products through its HomeKit division.

Last week, Apple shocked Wall Street with fiscal third quarter results that far exceeded estimates. Total revenue increased 11% during the quarter while earnings per share (EPS) jumped 18%. Apple’s share price jumped 10% that day, pushing its market cap up to $1.8 trillion.

Here’s the dirty little secret about Apple: iPhone sales have barely grown over the past year, up only 2.1% over the first nine months of this fiscal year. For all the hullaballoo about its Services division, that wasn’t Apple’s fastest-growing product group over the first three quarters of this fiscal year, either.

It was the Wearables, Home and Accessories (WH&A) division that was Apple’s fastest-growing product unit over the past nine months, up 26.6%. If Apple is looking for a market to grow sales at a fast enough pace to justify its lofty share price, buying an equity stake in Alarm.com would certainly help.

Ringing the Bell

Trading at less than $10 before the Google deal was announced, ADT was a cheap stock to own. But at $57, Alarm.com is a bit pricey. Instead of owning the stock, consider buying a call option on ALRM.

Also read: Amplify Gains Through Compounding

A few days ago, a call option expiring in March 2021 at a strike price of $50 could be bought for $13. If ALRM rises above $63 within the next eight months then that option will become profitable.

Now, let’s say Apple (or another company) makes a play for Alarm.com and its share price jumps 50% as ADT did. If you own the stock, that is your return. But if you own the option and ALRM jumps all the way up to $85, that option would have $35 of intrinsic value. That works out to a gain of 169%.

Another way of looking at that is the amount of capital at risk. Since the potential gain is more than three times greater, you only need to invest a third as much money to generate the same amount of gain. That means you can use the rest of the money to invest in other promising opportunities.

One such opportunity, also in the tech sector, is the global roll-out of 5G wireless technology. Super-fast 5G (aka “fifth generation”) will form the backbone of the aforementioned IoT and as such, 5G will revolutionize our lives. For the best 5G play now, follow this link.