3 Disruptive Themes on My Radar
July 8, 2017, 12:00 pm
One of my favorite parts of my job is keeping an eye out for and learning more about emerging technologies and products that have the potential to change our everyday lives. Regardless of what the market may be doing, there is always new buzz on Wall Street about the next great innovation. The trick is to filter through the chatter and zero in on what holds the strongest investment opportunities.
There are themes that hold potential, they just need more time to mature and fully develop into real investment prospects. Those are the ideas I keep on my radar, and I thought it’d be fun to share a couple of the top trends I’m watching that could become attractive plays down the road.
1. The Internet of Things (IoT): This concept is all about connected devices, such as smart ceiling fans and smoke detectors that send an alert to your cell phone if they sense smoke. There is a lot about the world of IoT that’s still developing, which means pure plays are hard to come by. While several tech behemoths trying to get an edge in this field, including Apple (AAPL), Cisco Systems (CSCO) and Alphabet (GOOGL), there’s a wide range of potential opportunities here. To fit internet-capable devices into product packaging, medical equipment and maybe even the air itself, developers are going to need new software, power systems and a whole lot of tiny sensors signaling their presence at all times. This is where I see some possible niche investments coming from and will continue to watch for the strongest ones.
2. Autonomous Cars: Converging trends in the transportation sector almost guarantee that you’ll find a parking place when 2021 rolls around – assuming that you’re actually looking for one. The next generation of fully autonomous cars and trucks from major manufacturers like Ford Motor (F) and Toyota Motor (TM) will be on the street by that point, and the fact that these vehicles will be able to steer themselves means more than a chauffeured ride for the people who own them. Autonomous cars are their own taxi drivers. Equipped with fare-routing software like the apps that drive the Uber fleet today, they can stay on the road as long as people need to be picked up or dropped off — no parking required in between! As with IoT, I see more potential in niche stocks that have ties to this theme rather than pure plays. For example, the companies that manage the fleets and build the vision systems that help these vehicles see where they’re going. It’s simply another case where science fiction is close to becoming reality!
3. Sharing-as-a-Service: The first wave of cloud computing pioneers made their money repackaging traditional information technology capacity on a subscription model, translating what were once one-time ownership transactions into recurring revenue. That’s ancient history. We’re now seeing the “as-a-service” approach slice across brick-and-mortar categories like jobs, housing (think AirBnB) and even ownership of basic household property. For example, if millennials stop buying cars in large numbers, ride sharing is the way of the future. The way to play this theme is to focus on companies that own the underlying assets as well as the innovators whose technology puts that inventory to work.
I hope you enjoyed this look at some of the game-changing themes on my radar. They’re not fully ready for us to invest in just yet for varying reasons, but are all worth watching for future profit potential.