Part Three – I Am Not Crazy, Do You Watch Movies ? The Investment Ideas
I believe that in every generation, there are always people born out of their “time”. Far ahead into the future, slightly ahead, or behind.
Jules Verne imagined us trawling the ocean depths but H.G. Wells did not live to see the space shuttle, Aldous Huxley, Arthur C. Clarke and George Orwell and my favourite Kobe Abe, all would not be able to recognise the world today. But the world we have today is really heading the way of George Lucas.
It started with my friend telling me about his personal quadcopter drone which he uses for aerial photography. Behold, the DJI Phantom GPS drone, all yours for just US 700, minus the camera, of course.
[This is not an advertisement because I do not even know these guys but I found this website selling the Phantom version 1 for SGD 649 (without the camera). http://www.singahobby.com/?q=node/31933 , so buy at your own risk]
And I was thinking about my little trusty and diligent iRobot Roomba vacuum when my son barges in to tell me about Titanfall, the latest game to be launched by Microsoft and which I already knew about for once, thanks to Business Insider’s review, when I realised that Microsoft is trading at a 14 year high, on a low P/E of just 13.85 times ! No wonder equity reports are screaming Buy’s. Yawn.
For weeks, I have been pondering on the implications of a society that will be driven by populism, worker dissent and self entitlement, and the way forward.
I see drones overtaking the world and it has already started in a big way this year. George Lucas, bless you ! Facebook, Google and Amazon are investing in drone technology, deliveries are already being made by drones, driverless cars are going to hit the streets of America in a few years, and it will only get better as menial labour gets replaced. We have big drones, hummingbird size drones, underwater drones, attack drones, defence drones, delivery drones, thief drones (that steal data on line), news reporting drones, riot control drones (coming) that we are only short of mass market human drones at the moment.
The only trouble is that there are few companies for the retail to invest in, as far as drones are concerned. The Phantom drone is made by a Hong Kong based company, DJI, that is privately owned and probably funded by private equity. Singapore Technologies has their drone program and we have a local company, Garuda Robotics, as well as a Singapore-Israel joint venture led by Singapore’s Horizon Energy Systems (private company).
Of course, it is not just about the drones. It is about what powers the drones – the fuel cells ! which is the next big thing in clean energy for the world with Walmart taking the lead, replacing their batteries with fuel cells, powered by clean hydrogen and barely pollutive. And fuel cell stocks are on a roll this year.
More on fuel cells : http://www.businessinsider.sg/fuel-cell-rally-2014-3/#.UzTrAoW0Q9Y
Going ahead, we have the artificial intelligence that Mark Zuckerberg and film star, Ashton Kutcher are going into, to create a program that would think like a human. Pretty much like what I mentioned in my previous post on the commoditization of white collar work.
I managed to dig up some stocks worth watching and accumulating that are publicly traded, as well as an ETF which has broad based exposure that is probably safer given the transient and evolving nature of technology.
1. Northrop Grumman Corp NOC US – a mostly defense contractor but with a growing drone unit. Price US 119.94 P/E 15.36
2. Aerovironment Inc AVAV US – designs, develops, produces and supports small unmanned aircraft systems, and fast charge systems for electric industrial vehicle batteries. Price US 38.89 P/E 77.94
3. Lockheed Martin Corp LMT US – another mostly defense contractor but also at forefront of drone research. Price US 158.88 P/E 14.75
4. Science Applications International Corp SAIC US – provides consulting services. The Company offers scientific,engineering, and technology applications and solutions to solve problems. Price US 36.42 Est P/E 16.10
5. Textron Inc TXT US – a global, multi-industry company with operations in aircraft, defense, industrial products, and finance. The Company’s products include airplanes, helicopters, weapons, and automotive products. Textron’s finance division offers asset based lending, aviation, distribution, golf,
and resort finance, as well as structured capital. Price US 37.78 P/E 20.11
6. General Dynamics GD US -a diversified defense company. The Company offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; shipbuilding design and construction; and information systems, technologies and services. Price US 106.37 P/E 15.13
7. IMCO Industries Ltd IMCO IT – manufactures military defense systems. The Company serves the Israeli, United States, and Turkish defense communities in developing, designing, and manufacturing electronic, electrical, electromechanical, and mechanical systems and subsystems for armored vehicles, tanks, and naval vessels. (listed in Israel)
8. ELBIT SYSTEMS LTD ESLT IT – designs, develops and supplies integrated defense systems. The Company also designs, develops, manufactures, markets and supports military electronic systems and products. (listed in Israel)
1. Plug Power Inc PLUG US – designs, develops, manufactures and commercializes fuel cell systems for forklifts and materials handling equipment. The Company does not produce on-site electricity generation systems or fuel cells for residential applications. Price US 6.89
2. FuelCell Energy Inc FCEL US – develops and commercializes fuel cell power plants for electric power generation. The Company also has contracts to develop its fuel cells for use of alternative fuels and for marine transportation applications. FuelCell has research and development contracts with government and industry. Price US 2.42
3. Ballard Power Systems Inc BLDP US – designs, develops, manufactures, sells and service hydrogen fuel cells for a range of applications. The Company’s products and services are used in many industries such as materials handling, residential cogeneration, backup power and transportation. Price US 4.38
1. Robo-Stox Global Robotics & Automation Index ETF ROBO US – an exchange-traded fund incorporated in the USA. The ETF seeks to track the performance of the Stox Global Robotics & Automation Index.
1. iRobot Corporation IBRT US – manufactures robots that vacuum and wash floors, and perform battlefield reconnaissance and bomb disposal. The Company markets its products to consumers through retailers, and to the United States military and other government agencies worldwide. Price US 40.48 P/E 37.26
Yes. It is too dicey for the fuel cells especially with none of them running a profit as yet and many of them all listed or listing at enormous profits to their venture capitalist founders. iRobot (read somewhere about its takeover potential) and ROBO are better bets, while the smaller companies are good bets as takeover targets. And we know that the VC’s are now moving into hardware these days with the 3D printer stealing the show.
What of the rest of the future ? Healthcare ? Environmental Science ? Real estate ?
Just watch the movies of the past decade. What was the main theme ? Overcrowded cities, which is happening now as 5 million people in the developing world migrate to urban areas , 67 people in the world are worth as much as the bottom 3.5 billion humans, so I wouldn’t worry about health care because we just need the 3.5 billion to riot and the governments will pick up the tab. Besides, death is the poor man’s doctor. Cities will get overcrowded and polluted like in those Oblivion movies, and people will move to space stations – there goes your real estate !
If the world today is George Lucas 30 years back – now drones, later clones, I think we pretty much know what we are expecting in the next 30 years although I am not so sure about the zombie apocalypses or the Marvel comics stuff.
As for me, I am wondering if I can programme that drone to get me some char kway teow for lunch.