The time for nanotechnology has come at last.
Ten years ago I rode a wave of profits on the back of nanotechnology companies like Harris & Harris (NASDAQ: TINY), which went from $3 to $25 in a little over a year...
The future was wide open, and momentum traders were pushing these shares to the sky.
But like all tech investment stories — especially back in the early 2000s — the "big idea" and mind-blowing innovation came well before the cash flow, revenues, and profits.
Smartphones, for example, were touted ten years before they became commonplace... but you would have made 34 times your money buying Apple in 2002.
That said, Harris & Harris is back to $3 and change.
But there are some nanotech stocks making money...
Ultimate Story Stock
The great thing about nanotech is that it is everywhere and all-encompassing: from medicine to materials to military, it is the ultimate investment story.
For those of you who don't know, the concept is simple...
Nano is to today what plastics were to the 1960s — with one major difference: With plastics and other traditional materials, you start with a large amount of matter and combine it with other matter using heat, filters, or molding, until you have an item with the properties that you are looking for.
(Steel is a perfect example. It is a combination of iron and carbon, but depending on which end result you want in terms of strength, endurance, and flexibility, manufactures also use manganese, chromium, vanadium, and tungsten.)
Nanotech, on the other hand, is the science of starting small. Nano builds up from the molecular level.
You stack carbon into Buckyball tubes to form an item ten times stronger than steel at a fraction of the weight.
Nanotechnology has a wide variety of uses.
It is currently being utilized to plug drugs directly into cancer cells; produce slow-release drugs to end daily insulin shots for diabetics; and produce high-tech bandages that stop bleeding and speed up the healing process.
Graphene materials can be used to increase gas mileage or shield computers from electromagnetic pulses.
Nanotech surfaces can stop ice buildup on airplanes.
There are rumors that a mosquito-sized CIA drone is now active and used for spying...
These drones have the capability of taking DNA samples, inserting an RFID tracking chip, or injecting you with cyanide.
The technology has the potential to produce garments that block chemical and biological weapons from touching a person’s skin.
Nanotechnology will change your life faster than the automobile did your grandparents'. It will be a turbo-charged industrial revolution.
And it is happening now...
Picks and Shovels
There is one $2 billion company that makes the microscopes and other scientific instruments necessary for nano research and production. It goes by the name of FEI Company (NASDAQ: FEIC).
For the last two years, FEI has been bouncing higher — and that's before the stock jumped 10% on its quarterly earnings announcement.
Here is the money shot from the conference call:
Net bookings for the quarter were $223.3 million, up 6% from Q2 of this year. The backlog at the end of the quarter was $425.2 million and represents just under six months of revenue at our current run rate.
Third quarter revenue of $221.8 million was up 8% from a year ago and normally from the second quarter, compared with the year ago organic revenue growth was about 6.4%.
Gross margins in the quarter were 47%, compared with 47.2% in the second quarter, and 44.4% a year ago.
What struck me was this bit:
Booking for our Natural Resources business are up over 50% both for the third quarter and the year-to-date period. Orders have balanced between mining and oil and gas customers.
It might surprise you to learn that nanotech is used in mining, oil, and gas — but it is.
FEI has Automated Mineralogy products that provide data for gold grain sizes, associations, and composition.
The nature of mining is that producers are getting less recoverable product and more junk rock. If you know how the gold is sitting, you can be more efficient in getting it out...
According to FEI's website, a gold producer might scan 2 million particles daily in order to gain a statistically relevant daily data set on mine performance.
I don't recommend you go out and buy up FEI's shares today. Put it on your radar, and stick your toe in when it nears that trend line.
All the best,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.