First, a caveat: I know very little about stock markets and investing so I’m not offering any comments about the quality of the investment advice offered in an April 23, 2014 article by StreetAuthority for the NASDAQ stock market website. The article is being featured here for informational purposes and because it focuses on nanotechnology (Note: A link has been removed),
A couple of months ago, the fund planners at Invesco PowerShares closed the book on one of the most unusual chapters in investing history, announcing a move to shut down the PowerShares Lux Nanotech Portfolio exchange-traded fund ( ETF ). A lack of interest was the main culprit in its demise.
… For many investors, the move signaled the end of the decade-long hype around nanotechnology stocks. Back in 2006, with nanotech mania in full bloom, Businessweek predicted that this emerging technology would represent a $2.6 trillion industry by 2014 .
That prediction overestimated the industry’s potential by at least $2.5 trillion.
StreetAuthority goes on to analyse some specific ‘nano’ stocks,
… A quick snapshot of where the remaining nanotech stocks trade in relation to their all-time highs paints a sobering picture. With the exception of FEI Co. (Nasdaq: FEIC ) , not one of these firms lived up to the hype.
Just when you think all is lost the author finds reason for optimism (Note: Links have been removed),
Yet just as most investors have written off the notion of nano-investing, the underlying technology is being seeded in a widening range of applications. Many industrial firms such as 3M (NYSE: MMM ) already derive solid recurring revenue streams from nanotechnology and are spending heavily on new products , which bodes well for the companies that make the tools to help further this technology’s development.
FEI, for example, is expected to reach the $1 billion revenue mark this year for the first time. FEI’s equipment helps other firms analyze and develop nanotechnology-based products and chemistries, mostly in the semiconductor industry. The company has delivered on the promise of nanotech, but shares appear fully valued, as top-line growth is around 10% and shares trade for more than 20 times next year’s earnings.
A more intriguingly valued stock is Flamel Technologies (Nasdaq: FLML ) , a biotech firm that has developed a range of drug delivery methods to deliver nano-sized particles into the bloodstream. Though this firm could never live up to the nanohype of a decade ago — and a decade of annual operating losses will wilt any investor’s confidence — shares are starting to rebound as key products start to reach the market.
It’s nice to be able to supplement the information one gets from government reports on commercializing nanotechnology with some ‘stock market’ analysis. As for whether or not this is good advice, caveat emptor (buyer beware). I can say that the author does not seem to have a solid grasp of the term ‘nanotechnology’, e.g. “… a new and much-hyped technology known as graphene holds the same promise , and in a few years we may see huge sums of money chase after graphene companies, just as we saw with nanotechs.” [emphasis mine] Generally speaking, graphene is considered to be part of the ‘nanotechnology enterprise’.