This Tiny Device Is Driving a $38 Billion Opportunity
In the legendary sci-fi movie Fantastic Voyage (1966), a submarine crew is shrunken to microscopic size and injected into the bloodstream of an injured scientist to repair damage to his brain.
This technology is no longer the stuff of Hollywood fantasies. Linda McDonough, chief investment strategist of Profit Catalyst Alert, explains that “inner-space” devices are all around us… and maybe already inside you.
It’s called Radio Frequency Identification (RFID), which uses tiny transponders called “tags” to pinpoint and track objects. Each miniaturized tag, many weighing as little as a grain of rice (0.0725 ounces), sports an embedded antenna that transmits and receives radio waves from an RFID transceiver.
Research and Markets estimates that the global market for RFID and related technologies should reach $38 billion by 2021 from $16.2 billion in 2016, for a compound annual growth rate from 2016 to 2021 of 18.6%.
Below, I examine three well-positioned RFID investment plays. First, let’s explore the exciting ramifications of this disruptive technology.
Tag! You’re it…
Linda asserts that miniaturized, wireless tracking devices for medicine, retail, manufacturing, and a wide range of other industries are one of the hottest investment trends you can find.
Doctors are using RFID sub-dermal implants in patients to monitor their whereabouts, bio-functions and medical history. Pharmaceutical firms are using RFID to track millions of proprietary drug compounds in their product libraries. Laboratories use RFID products to track tissue or fluid samples.
RFID tags also are used in tollbooths, at the gas pump, in retail stores, on automaker factory floors, and on the farm inside livestock. In the aviation field, they’re used to track aircraft parts and passenger bags.
As Linda points out:
“Even if you’ve never been burned by phantom merchandise, know that many businesses — from retailers to hospitals to factories — must keep increasingly close tabs on their inventory just to survive in the business jungle…
The 2,000-pound gorilla of the retailing jungle is Amazon, which can fulfill an order online, in-store or via mobile with the correct inventory quickly, and it’s set a new standard in tracking and delivery.
Retail is not the only industry adopting this technology. Hospitals, keen to meet efficiency standards… are eager to tag and trace bio-specimens, supplies and equipment.”
A “Fantastic Voyage” of profits…
Our technology specialists at Breakthrough Tech Profits emphasize that wireless tracking systems such as RFID represent an exploding, multi-year investing bonanza, especially as they are integrated into the Internet of Things:
“By the end of 2020, the installed base of ‘things’ could top 200 billion worldwide, including some 30 billion installed autonomous things, largely driven by intelligent systems that will be collecting data across both enterprise and consumer applications, according to research firm IDC.
All processor-based systems (think handsets, wearables, GPS devices, RFID tags, automobiles, airplanes, medical devices, HVAC controllers and smart meters) continuously generate machine data, both structured and unstructured.”
The growth stock winners of the future will be the companies offering software platforms that enable organizations to gain operational intelligence by sorting through all of this data.
Jim Pearce, chief investment strategist of Breakthrough Tech Profits, reminds you that a sure path to profits is to pinpoint the right “disruptors.”
“The overarching theme at Breakthrough Tech Profits is profiting from disruption. That could be a company with a new technology that will rewrite the rules of an industry, or a company that’s remaking itself by grafting a new technology onto its existing business to leapfrog the competition.
We search for these stories because they so often yield surprise profits — and most analysts don’t count on disruption, though we’ve seen it pay off time and again.”
Sometimes disruptors are found in unlikely places…
Who says packaging companies are boring?
Maybe you’ve never heard of Avery Dennison (NYSE: AVY), but it’s the world’s biggest manufacturer of RFID tags. With a market cap of $6.56 billion, Avery Dennison also manufactures and sells everyday items such as pressure-sensitive labels, packaging products, and office supplies for a wide variety of industries.
Those products may seem boring, but many companies couldn’t function without them. An old-line legacy company in the conventional packaging industry, Avery Dennison has maintained its competitive edge by embracing the research and development of RFID.
The company foresaw the rapid growth of RFID applications long before anyone else and now dominates the field. AVY stock has zoomed higher in tandem with the explosion in RFID. Shares have gained 157.42% over the past five years and 20.74% over the past 12 months, with lots of room left for capital appreciation.
AVY is scheduled to report fourth-quarter 2016 results, before the opening bell on Wednesday, February 1. The average analyst expectation is that AVY will report earnings per share of 93 cents, compared to 85 cents in the same quarter a year ago.
AVY shares trade at a trailing 12-month price-to-earnings ratio (P/E) of 21.3, less than the trailing P/E of 23.4 for its peers. Analysts peg earnings growth for the next five years at a robust 10.7% on an annualized basis.
In an overvalued and volatile broader stock market, AVY is an attractive defensive growth play ahead of its earnings release on Wednesday. There’s ample historical precedent for an earnings surprise, which would be a catalyst for a spike in the stock’s price.
The company in the previous quarter posted a positive earnings surprise of 1%. In fact, Avery Dennison has exceeded analyst estimates in each of the trailing four quarters, with an average positive earnings surprise of 6.8%.
Two additional RFID plays are long-time denizens of the Personal Finance Growth Portfolio: IBM (NYSE: IBM) and Honeywell International (NYSE: HON). Both companies offer RFID solutions for a wide variety of applications and they’re continually plowing ever-greater resources into developing smaller, more powerful tags.
Got any questions about RFID or anything else? Drop me a line: firstname.lastname@example.org — John Persinos
Inside information that’s 100% legal?
RFID implants are a huge and growing business, but there’s more than one way to profit from being “inside.”
Wall Street likes to keep them a secret, but a network of “hotlines” exists that any individual investor can call into to hear fully legal “inside information.” Often, the discussion on these calls has tipped off the imminent up or down movement of stocks, allowing the privileged few to make a killing.
With nearly 30 years of hedge fund experience, Linda McDonough, the guiding force behind Profit Catalyst Alert, is uniquely positioned to provide the inside scoop on these calls… and she wants to let YOU into the inner circle.
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