New York (HedgeCo.Net) By Michael Williams – Before Apple’s (AAPL) recent fall from grace, it was the big savior during the Great Recession. The company continued to push out new products, the media embraced them, and as all others struggled it was Apple defining the technology boom. Their latest and biggest contribution was the birth of the tablet, with the iPad. Now, many competitors are in the tablet market and seemingly everyone is making one. So, now the question is what is the next big technology boom that could see capital injections and in to which investors rush?
There are several interesting prospects and I am not yet sure which will become the next NEW thing which garners investment capital, big IPOs, and media buzz. Here are a few to think about:
We are seeing a boom of software and Apps that are becoming reliant on Cloud Computing. These software products are known in the industry as “Software-as-a-Service” or SaaS. An example of SaaS is media driven content companies likeSpotify and Hulu. These companies need Cloud-based computing horsepower to store and push out their on-demand content (Software-as-a-Service). Software like Google Docs is also a SaaS solution. I expect we will see more SaaS services in the coming year. So, this is a two-level play. First, we have the companies like Hulu and others that rely on subscribers, and second, we have companies that provide the technology that Hulu-type companies need, like Cisco (CSCO).
3-D printing has certainly been garnering a lot of bad press in the news recently, with the recent “gun parts” designs. However, as the saying goes; “Bad publicity is still publicity!” While nefarious activities can be had with a variety of technologies, it is no doubt that 3-D printing is starting to come into its own and hitting the mainstream markets. The prices have come down from $50,000 to under $5,000 for some of these printers and I think they will continue to fall. The industry saw an accelerated rise in sales that topped $2 billion in 2012, which is up several fold in the last couple of years. Some analysts are expecting this market to increase over 200% in the next 2 years. This sector also has different players, from the makers of the low cost entry models to the producers of the media needed for these printers to work. There is also a bigger play in manufacturing; several firms are looking at special composites on larger scale manufacturing – even car parts. We are a ways away yet from seeing massive 3-D production lines, but that is a very real future.
Oil and Gas technology boom:
Whether we like it or not, Fracking is here to stay. There is a huge boom in fracking technology to lower the cost and increase production (as well as address safety and environmental concerns). The industry as seen a huge increase in investments to tap new found resources. One company, called GasFrac, is already testing new waterless fracking in Texas.
Fracking is not the only technology to boom; we are also seeing a larger adoption of alternative energy for cars. In Brazil, Ford (F), GM, and Honda are already offering models that run on compressed-natural-gas (CNG) and liquefied-natural-gas (LNG). When I was in Thailand, all the cabs I saw had been converted to use CNG (which they had a tank in the trunk that made for storing our luggage a little difficult). According a report, the world has seen a significant rise in CNG/LNG cars, from 50,000 to 3,000,000. However, the auto companies are not the only possible play in this sector; there are also the commodity itself (natural gas), the producers, and companies that are making conversion kits for existing automobiles. We could very well see a new industry pop-up in this sector.
Cloud Computing has helped give rise to a boom in on-demand media companies. I currently subscribe to Spotify. In fact, I have not downloaded an MP3 or bought a CD since joining this service. I can take my music anywhere, easily find new music, and port it to my home stereo or play it on my computer or iPhone. Spotify is just one of many such services. Hulu, Netflix, Amazon (AMZN), and even YouTube are moving into this sector, and fast. There are many players and it will be hard to see who will be dominating in this space. Currently Netflix (NFLX) is the king of the hill, but that doesn’t mean they can stay there. Some of these companies are not public, but they soon may be, or they could be gobbled up by existing public companies.
I know I will get beaten up by several of my friends on this, especially after all the failures and criticisms that have been lobbed at President Obama for his several failed public/private investments in companies like Solendra; however, there have been some recent advancements in the solar industry which are bringing forth two important elements that could create a boom. First, we have seen pricing fall pretty significantly in the last couple of years; down over 20% in the last year alone. Second, the efficiency is drastically improving. There are three new solar technologies, that I am aware of, which improve efficiency 10 to 50%. I would not be surprised to see a boom in Solar technologies in the coming year. Why did it not boom before? Well, I don’t think anyone can FORCE something to happen and no matter how much the government wishes to invest and rely on HOPE, it is not until a technological break-through occurs and competition drives both demand and lower prices, which will bring forth a boom.
KWT (Market Vectors Solar Energy ETF)
Courtesy of www.silexx.com
These are just a few examples of areas in which I expect a technology boom could come from in the next couple of years. I would not be looking at Apple to carry the water for the industry anymore; instead, I would look at the sectors above for any huge developments. It would pay to take some time to research the sectors, the companies and developments. None of these will be short-term plays, but it’s always good to be the first in on the ground floor.
Charts have been reproduced using Obsidian software, by Silexx Financial Systems, LLC. For a free trial of the Obsidian trading & risk management platform, please visit www.silexx.com or call 888-SILEXX-1
Article by Michael Williams who writes a daily Market Preview, which can be found at http://marketpreview.silexx.com/