Nanotechnology innovations benefit areas as diverse as cancer therapies and solar energy solutions. Here’s why you should consider investing in nanotech stocks.
The nanotechnology market is currently experiencing a promising stage of growth, making it an attractive space for both first-time and sophisticated investors.
From nanotechnology-based solar panels that increase energy efficiency to therapeutics that make use of nanotech in the biomedical field, nanotechnology investing has far-reaching effects that are quickly transforming the world as we know it.
With that in mind, here the Investing News Network provides a brief overview of what nanotech is, what the market looks like right now and what the industry’s future could be. Read on to see if investing in nanotech stocks could work for your portfolio.
Nanotech stocks: What is nanotech?
Nanotechnology is the manipulation of matter on a nano-scale. A nanometer is one-billionth of a meter, or approximately one-90,000th the width of a single human hair.
Lauded as the “new industrial revolution,” research and development into nanotechnology has significant implications for almost every industry. With the market expected to reach a staggering $75.8 billion by 2020, this micro-scale industry is producing macro returns for savvy investors.
Nanotech stocks: Market overview and outlook
In 2006, Lux Research estimated that revenues from products using nanotechnology would reach $2.6 trillion by 2014 (a staggering increase from the $14 billion that nanotech produced in 2004).
These optimistic market predictions spurred a flurry of nano-investing activity, including the launch of the PowerShares Lux Nanotech Portfolio, an $89-million exchange-traded fund launched by Lux Research and PowerShares Capital Management.
Ultimately the PowerShares Lux Nanotech Portfolio didn’t live up to its initial promise. Despite predictions at the peak of the mid-2000s nanotechnology investing bubble, nanotech stocks didn’t achieve the rate of growth that investors had hoped for — after primarily incurring losses after its inception, the fund liquidated in February 2014.
However, this news isn’t all bad. What has emerged out of a boom-and-bust market is an industry focused on strategic long-term business plans, and in-demand innovative products. Many firms receive steady revenue from nanotech products, which they re-invest in the market to drive innovation.
For example, nanotech giant 3M (NYSE:MMM) uses nanotechnology in products destined for the dental, electronics, architecture and energy markets. Used in dental restoratives (like fillings, crowns and orthopedic brackets), and brightness-enhancing optical films (which make LCD displays bright and clear), nanotech has a diverse range of uses. Some of 3M’s core nanotech products include its Filtek™ series.
With an anticipated compound annual growth rate of around 16.9 percent, the nanotech market still appears to be a promising investment. Although the dramatic anticipated growth rates of the mid-2000s are a thing of the past, what remains is a solid market that consistently produces exciting, far-reaching and potentially transformative products.
Nanotech stocks: Smaller companies
With the nanotech market poised for growth, nanotech stocks with smaller market caps may benefit from this flourishing industry. Here are a few investors may want on their radar:
- Nano Dimension (NASDAQ:NNDM) — Founded in 2012, Nano Dimension is a research and development company with a focus on advanced 3D printing– and nanotechnology-based ink products. The company’s lead products include the DragonFly 2020 3D printer, as well as advanced nanotechnology-based conductive and dielectric inks.
- Nanotech Security (TSXV:NTS) — Nanotech Security has been around since 2009, and since then has created technology solutions in a number of areas, including criminal justice, night viewing, tracking security and forensics. One of its products is KolourOptik, which is a nanotechnology platform for markets such as authentication, brand protection and anti-counterfeiting.
- Nanophase Technologies (OTCMKTS:NANX) — Unlike the companies listed above, Nanophase Technologies has existed for over two decades, and provides engineered nanomaterial solutions to a variety of different markets, including surface finishing, exterior coatings, personal care, plastics, scratch-resistance coatings and textiles.
- NanoViricides (NYSE:NNVC) — NanoViricides was founded in 2000 and is a development-stage company in nanomedicine technology. It is currently developing a nanotechnology-based biomimetic anti-viral medicines that it calls “nanoviricides.”
Taking all of the above into consideration, would you invest in nanotech stocks? Which ones would you choose? Tell us your thoughts in the comments.
This is an updated version of an article originally published by the Investing News Network in 2015.
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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.