In the legendary science fiction film Fantastic trip (1966), a submarine crew is shrunk to microscopic size and injected into the blood of an injured scientist to repair damage to his brain. When I first saw Fantastic trip as a child, my imagination ignited.
But this technology is no longer the stuff of Hollywood fantasies. “Inner Space” Devices Are All Around Us…and Maybe Already Inside you.
This‘s called radio frequency identification (RFID), which uses tiny transponders called “tags” to locate and track objects. Each miniaturized tag, many of which weigh only a grain of rice (0.0725 ounces), sports a built-in antenna that transmits and receives radio waves from an RFID transceiver.
According to research firm Statista, the global RFID market is on track to surpass $41 billion by 2025, up from around $10 billion in 2014 (see chart).
Below, I examine a well-positioned RFID investment play that offers both growth and downside protection. First, let’s explore the exciting ramifications of this disruptive technology.
Label! You are…
Miniaturized wireless tracking devices for medical, retail, manufacturing, transportation, logistics, and a wide range of other uses represent one of the hottest investment trends you can find.
Doctors use subcutaneous RFID implants in patients to monitor their location, biological functions, and medical history. Hospitals, keen to meet efficiency standards, use RFID to track biological samples, supplies and equipment. Pharmaceutical companies use RFID to track millions of proprietary pharmaceutical compounds in their product libraries. Laboratories use RFID to track tissue or fluid samples.
RFID tags are also used at toll booths, at the gas pump, in retail stores, in automobile manufacturers’ factories, and on the farm inside livestock. In aviation, they are used to track aircraft parts and passenger baggage.
Many businesses, from retailers to hospitals to factories, need to monitor their inventory ever more closely just to survive. Particularly, Amazon (NSDQ:AMZN) has set a new standard in RFID tracking and delivery.
A “fantastic journey” of benefits…
Wireless tracking systems such as RFID are a multi-year investment bonanza, especially as they are integrated into the Internet of Things.
All processor-based systems (such as handsets, wearables, GPS devices, RFID tags, automobiles, aircraft, medical devices, HVAC controllers, and smart meters) continuously generate machine data, structured and unstructured.
Watch this video: 5 tech megatrends for 2022
By the end of 2022, the installed base of web-enabled “things” is expected to exceed 200 billion globally, including some 30 billion installed standalone devices, largely driven by intelligent systems that will collect data in enterprise and consumer applications, according to research firm IDC.
Future winners in growth stocks will be companies with disruptive technology, offering software platforms that allow organizations to gain operational intelligence by sifting through all this data.
Sometimes disruptors are found in unlikely places…
Who said packaging companies were boring?
Maybe you’ve never heard of Avery Denison (NYSE: AVY), but it is the world’s largest manufacturer of RFID tags. With a market capitalization of $14 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.
These products may seem boring, but many businesses couldn’t function without them. A traditional company in the conventional packaging industry, Avery Dennison is a classic cyclical “reopening” play about economic recovery in the age of the pandemic.
Even though the economy is slowing this year due to inflation, higher interest rates and the Russian-Ukrainian war, customers will still demand the company’s products during this late cycle of recovery.
Avery has also maintained its competitive edge by embracing RFID research and development. Avery foresaw the rapid growth of RFID applications long before anyone else and now dominates the field. With cash in excess of $141 million (most recent quarter), the company can pursue its long-term growth strategy of acquiring smaller technology companies that are developing innovations in RFID technology.
Analyst consensus is that the company is expected to post 15.4% year-over-year earnings growth in the next quarter. The company is expected to thrive in the post-COVID economy, when technologies such as RFID will be in even greater demand.
The stock’s 12-month forward price-to-earnings ratio is around 18. Analyst consensus has set a one-year price target for the stock at $218.27, which, relative to levels current ones, would represent an increase of approximately 23%.
The dividend yield is a decent 1.75%. In a broader volatile stock market, AVY is a reasonably priced “defensive growth” play and long-term bet on disruptive technology.
Editor’s note: RFID isn’t the only tech megatrend making early investors rich. Some of these technologies are still hidden in laboratories, waiting to be unleashed on the world.
In fact, our colleague, Dr. Joe Duarte, Chief Investment Strategist of Profit Catalyst Alerthas just identified an unknown start-up that has developed a revolutionary “black box” technology.
You need to get on the ground floor of this game-changing opportunity, before the investment herd finds out and drives the stock price higher. Click here for more details.
John Persinos is the editorial director of Invest daily.