Nothing has had such a profound effect on the history of mankind as technology. From Gutenberg’s printing press to the Big Data and Internet of Things today, technology has improved our lives in immeasurable ways. 

#-ad_banner-#However, there is a dark side to our technological society, and a backlash is building around the world. Big Data and the Internet of Things have begun to chip away at the privacy of individuals and small groups. Individuals are starting to demand tools to protect what’s left of their privacy.

Investors who act upon this trend by investing in companies already profiting from the technological backlash stand to reap great rewards. 

The Internet of Things (which I wrote about last year) refers to the widespread connection of machines and devices to the Internet. Although the Internet of Things is now in its infancy, it’s growing exponentially, and it’s estimated that over 30 billion devices will be connected to the Internet by 2020.

Within the next five years, the average family is projected to have 10 Internet-connected devices in their home. The orange juice pitcher in your refrigerator may be able to alert you when it’s nearly empty and automatically place an order for more with an online grocery store. Don’t laugh — we are well on our way to this supposed techno-utopia. Remember, Google (Nasdaq: GOOG) recently purchased Nest, a maker of Internet-connected thermostats and smoke detectors, for $3.2 billion. Nest believes in a “conscious home,” and Google clearly believes in the potential profitability of such ideas. If your home is “conscious” and knows about you, just imagine what Google could do with that data. 

Another fascinating sign of this trend: Marketing technology company Axciom Corp. (Nasdaq: ACXM) says it has the ability to measure 3,000-plus shopping tendencies for almost every U.S. household. While Big Data has a legitimate use in marketing to better target consumers, the question is: How much tracking is too much?

You can see the potential dark side of Big Data, conscious homes and 30 billion connected objects. It’s frightening to think that any object could one day possess the potential to spy on its owners and other people.   

Consumers are starting to worry about this rapid increase in the collection and use of personal information, as well as the potential for abuse. Pew Research Center recently found that 50% of Americans are concerned about their information on the Internet, up from 33% in 2009. 

In addition, Pew’s survey revealed that 86% have made efforts toward hiding their online identity. This is where huge potential rests for investors. The development and marketing of privacy tools is truly an industry in its infancy with tremendous upside. 

There are several companies in this space, but my favorite is AVG Technologies (Nasdaq: AVG). Amsterdam-based AVG is an Internet security company that provides anti-virus, anti-spyware, social media protection, and a variety of identity protection tools. The company has 177 million active users and sells its software directly through its website and to resellers in 185 countries.

What I like most about AVG’s software is the PrivacyFix program. This program is a free download from the company and provides insight for the user into what information is being shared with social networks. It also monitors users’ privacy settings as well as sites changes to privacy policies alerting users to the changes. In addition, a new application called AVG Zen runs on computers and mobile devices helping to keep a user’s complete online presence secure.

Boasting a market cap of $1.1 billion, revenue of $407.1 million and a gross profit of $338 million, AVG is well established in its niche. In addition, the fact that nearly 27% of shares are held by insiders reinforces the company’s strength. Several recent analyst upgrades — such as BWS Financial’s upgrade to “buy” and JMP Securities’ move to “outperform” — has sent shares higher on the year.

Risks to Consider: Internet privacy protection is a very competitive niche. Although AVG has the lead currently, any of AVG’s competitors may have the potential to create game-changing software or applications in the field. Always use stop-loss orders and remain flexible when investing in overall trends like the trend toward privacy.

Action to Take –> I like buying AVG on a break above $21 to confirm the upward momentum. Stops at $16 and a 12-month price target of $29 is my call for the stock.

P.S. If the potential of the Internet of Things has you excited, wait until you see what StreetAuthority’s Andy Obermueller has been working on. Andy has identified five “game-changing” trends with the potential to revolutionize the way we live our lives — and make early investors a killing. Among these technological developments: robots that perform surgery with microscopic precision… machines that can “replicate” objects seemingly out of thin air… and a pair of technologies that will change the face of transportation forever. To learn more about these developing technologies — and the companies behind them — follow this link.