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5 ASX tech stocks set to benefit from a massive trend

Taking notice of new trends and investing ahead of the curve can be a great way to see your portfolio skyrocket.

One new trend that is widely expected to affect everyone is the ‘Internet of Things’ (IoT). As Wikipedia notes, it’s the interconnection of multiple devices on the existing internet infrastructure.

The size of the web as we know is expected to multiply, causing greater demand for data storage, processing, transmission, as well as a host of new products to deliver the new capability.

Here are five stocks that are set to benefit from the IoT.

Altium Limited (ASX: ALU) designs software for designing printed circuit boards (PCBs). PCBs are already in everything from TVs to solar lights, computers, smartphones to cars and toasters. Altium makes money from one-off licence fees and ongoing subscription fees. With plenty of cash on its balance sheet and around 95% of its revenues offshore, Altium is one stock to add to your watchlist.

Panorama Synergy Limited (ASX: PSY) has clearly caught the attention of investors, rising 208% in the past 12 months, but a recent pull back of 17% may provide an opportunity. Panorama has developed an optical readout system for MEMS (microelectromechanical systems), which are expected to be huge in the future. These tiny machines could completely transform some areas such as medicine, where MEMS can be highly sensitive such as picking up traces of lung cancer on your breath. Panorama’s LumiMEMS reader could play a big part.

Netcomm Wireless Ltd (ASX: NTC) has traditionally been known for its range of Netcomm broadband modems and routers, but is transitioning to machine-to-machine (M2M) communications, which now account for more than half the company’s revenues. This is likely to grow as the company adds more products to its line up and demand rises.

Vocus Communications Limited (ASX: VOC) provides a big part of the backbone of communications, through its fibre network and data centres. Network communications provider Cisco forecast in February 2014 that mobile data traffic is expected to increase eightfold in just 4 years, growing annually by 50%. The companies providing the ‘pipe’s to enable the transmission of that data and storage will be right in the middle of that demand, and Vocus’ merger with Amcom Telecommunications Limited (ASX: AMM) will only increase its leverage and scale.

NextDC Ltd (ASX: NXT) is purely a data centre operator. But as more data is generated and consumed, demand for storage and access to this data will skyrocket. With more and more connected devices, more data and more companies moving their applications and software into the Cloud, NextDC should see higher demand for its services.

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Motley Fool writer/analyst Mike King owns shares in Vocus and Amcom. You can follow Mike on Twitter @TMFKinga