From Buzz to Business: 2 New Themes on my Radar
August 8, 2017, 5:30 pm
We talked a few weeks ago about the different ideas I keep on my radar that could eventually turn into blockbusters – they just need more time to fully develop into real investment prospects. I thought for today it would be fun to continue that conversation with two other themes I have my eye on: energy and tech.
1. Energy: This sector remains a red line until we get confirmation that $50 a barrel is closer to the floor on oil prices as tension within OPEC and around the world plays out. However, I can’t help but notice that the United States is finally in position to become a major exporter of natural gas that producers would have been forced to vent into the air even a few years ago.
If we’d played the evolution of liquefied natural gas (LNG) from the beginning, it would have likely been too rocky to tolerate. Now, however, with deeply supportive trade policy and the infrastructure in place, U.S. gas companies like Cheniere Energy (LNG), Sempra Energy (SRE) and Kinder Morgan (KMI) have the keys to become global players. Unfortunately, valuations in the group are on the high side, but on the right swing they may become interesting.
Whether you’re a big coal fan or not, it’s also clear that the Trump administration favors sales of U.S. metallurgical coal to countries like Ukraine that need to support their steel industries.
2. Technology: This is never far from my screen. We covered several hot spots last month, and this time around I’d like to add remote medicine and lithium into the mix, along with plays on automated workflow.
Remote medicine is interesting as a way for insurance companies and ultimately the federal government to better serve rural communities, especially those infamous counties where Affordable Care Act (ACA) carriers have stopped doing business. Just think of the impact the virtual or geographically distributed office can provide a consultation on demand, deploying their capacity and ultimately helping more people. Companies like Teladoc (TDOC) are at the forefront of this theme and others are venturing into it as the way doctors treat their patients evolves.
Lithium is technically an energy technology, but "technology" is definitely the operative word as all the world’s computers need batteries before Elon Musk can build one more Tesla (TSLA) automobile or home power storage system. While a lot of people favor foreign lithium producers here, I have to say Musk wants to use Nevada suppliers, which means Albermarle (ALB) leads a pack of small prospectors and other hopeful Tesla partners.
While the top-level view on workplace automation focuses on Big Data and artificial intelligence (AI) plays like International Business Machines (IBM), the nuts and bolts revolve around specialized vendors that are applying AI techniques to specific job functions. We’ve seen Salesforce.com (CRM) revolutionize customer relations, and the next wave is starting to build.
Of course, it’s too early to say whether any of these themes or companies will ever become good investments, as we need a lot more buzz before buying. In the meantime, they sure make for some interesting research!