By Matt McCallMay 31, 2017
I’m always looking for the next breakthrough that changes our lives and gives us big investment potential. Still, I’ll admit that even I was skeptical about self-driving cars until just a couple of years ago.
Most people still can’t quite imagine walking outside, having your car pick you up and then driving you to your destination. We’re still not quite there, but we will be sooner than a lot of people realize. What turned me from a skeptic into a believer – at least in the investment sense – is when I started to notice the increasing amount of money flowing into this futuristic technology.
It’s now starting to show up almost everywhere you look. For example, the state of Tennessee, where I just opened up a new office, passed a bill this week that will get the state ready to have autonomous vehicles on the road.
And last week we saw one of the major automakers make a big shift toward the next generation of vehicles when Ford Motor (F) replaced CEO Mark Fields with Jim Hackett. Normally a change in leadership wouldn’t be this noteworthy, but Hackett is the former head of Ford Smart Mobility – the division focused on connected and autonomous vehicles. This is a major statement on where the company intends to set its focus next.
Ford is certainly an option when it comes to playing this new mega-trend, but I don’t necessarily believe it’s the best. I talked about why in an article this past weekend, which you can check out here.
This trend toward autonomous vehicles is part of the Tech Revolution mega-trend that is changing the way we live. Even Old Wall Street is taking notice of the push toward driverless cars, as some of the real heavyweights like Alphabet (GOOGL) and Intel (INTC) have entered the race. In fact, Morgan Stanley sent a note to clients last week talking about their 30 favorite ways to profit from self-driving cars. Now if you know me at all, you know that I love to look beyond the obvious plays on a mega-trend. I’ve found some of my best investments that way. So I give Morgan Stanley credit for thinking outside the box, but, well, some of their ideas have me scratching my head a bit.
They said one of the winners could be Disney (DIS) because people will be able to watch more videos with all the free time they gain by not driving. And alcoholic beverage companies like Buffalo Wild Wings (BWLD) and Constellation Brands (STZ) would benefit as people will be able to drink more and not worry about driving under the influence. They also said that Domino’s Pizza (DPZ) could benefit with lower delivery costs.
Okay, Domino’s actually makes a certain amount of sense to me. But videos and adult beverages? Sure, some people will have a beer and watch a movie in their car when that day comes, but come on. Is it really going to move the needle that much on these huge corporations?
Our NexGen approach is to position ourselves in the companies we know will actually benefit from the next-generation of vehicles sooner than later. Maybe not tomorrow – although there will definitely be shorter-term trades along the way – but not 10-15 years down the road either. There’s a whole lot of money to be made in the interim as testing and production is completed.
A combination of factors has held back the mass production of these cool new vehicles, but one of the main ones is cost. The LIDAR (Light Detection and Ranging) sensor is at the heart of the self-driving car, and it’s what allows the vehicle to detect 3D images. It’s just one of the many extremely important sensors that are critical to production, but it costs a pretty penny. A few years ago the sensor rang in at $75,000. It’s one-tenth of that cost today and should continue to come down as the technology develops and demand increases.
The vehicle sales, supplies and services industry is a $7 trillion space that is about to be changed forever, and now is the time to get in position. That’s why we recently added a stock to our NexGen Investor Buy List that is a play on this theme. It’s a European company that makes semiconductors that will hold an integral role in the expansion of the self-driving phenomenon. It meets all three of our NexGen criteria, and I see potential for 25%+ gains even now. (You can get all of the details with your risk-free membership. Click here to find out more information.)
Keep your eyes open, because this is just the first of many opportunities in this NexGen mega-trend. And I’m not talking about pizza and beer companies. Although if Morgan Stanley is right and people are eating and drinking that much more, we may have some good opportunities in NexGen healthcare and nutrition stocks!
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