10 Investments In The Future

In yesterday’s post about ‘Artificial Intelligence’ and workplace-automation through robots, the main topic was to accept and adopt the necessary changes caused by technological progress.

Whether you like it or not, it will happen. So it might be a good idea to prepare yourself to be ready for these changes. And I might have an even better idea, to profit from it. After all, behind each technological revolution are often small companies that turned into very successful brands, when their innovations or products became global standard over time.

Just think of the fortune you missed, because you didn’t invest in Microsoft in 1986 or Google in 2004…

For an investment in the future, I composed a list of 10 companies of different stages and sizes, from newcomers to corporations with a long tradition, mainly active in the medical- and robotics-sector who could profit big from the ongoing revolution in advanced technology.

Intuitive Surgical  (NASDAQ; Tickersymbol: ISRG)

The company from Sunnyvale in the Silicon Valley manufactures robotic surgical systems, in particular the ‘da Vinci Surgical System’ – a reference to Leonardo da Vinci’s study of human anatomy that eventually led to the design of the first known robot in history. The research for the development of the da Vinci Surgical System was performed in the late 1980’s at the non-profit SRI-Institute.

Today, roughly every minute of every day, a da Vinci robotic-assisted surgery begins and more than 3 million procedures having been performed globally to date. And it is still early in its evolution, with independent analysts expecting the use of surgical robots to more than double by 2020.

Cyberdyne (Tokyo Stock Market; Tickersymbol TYO:7779)

If you saw the Terminator, you’re familiar with the name Cyberdyne as the creator of Skynet, an artificial intelligence system that tries to destroy all of humanity.

Well, in real life, there’s is also a company called Cyberdyne. And they make robotic exoskeletons… But no worry, the Japanese company builds exoskeleton suits that are used in nursing homes and hospitals to assist people with walking.

Cyberdyne was established in 2004 as a spin-off from the University of Tsukuba to build a strong research and development organization to provide technology and treatment methods in the field of physical movement and rehabilitation therapy. Working with insurers (healthcare and worker’s compensation) in Germany and Japan, Cyberdyne has developed a complete line of exoskeleton products for brain- and mobility disabilities as well as non-medical purposes such as eldercare and worker assistance.

But the founder of real Cyberdyne, Yoshiyuki Sankai, is probably a fan of sf-movies as his exoskeletons are called HAL, as the evil robot in Stanley Kubrick’s classic film 2001: A Space Odyssey. For an investor, it’s always good to know that the developer is a bit of a geek – they used to have the positive tendency to never give up..

Juno Therapeutics (Nasdaq; Tickersymbol: JUNO)

The biopharmaceutical company from Seattle has one main goal: To revolutionize medicine by re-engaging the body’s immune system to treat cancer. From an investor perspective, the development of such a ‘cancer-killer’-drug is one thing, getting the approval by the Food and Drug Administration (FDA) to market the product is even more important. Companies go through several phases in order to get the drug approved by the FDA. It requires (a lot of) data, time and money:

Phase 1 is the easiest. It usually involves just 20 to 100 patients. 70% of the drugs pass this phase. Phase 2 can be several hundred patients. These trials can last months or years. Just 33% of the drugs pass this phase. Phase 3 is tested on a larger test group of patients, usually numbering in the thousands. Just 25-30% pass this phase. There’s a Phase 4 where even more testing is done, usually involving an even larger number of test patients, to test the drug’s safety and efficacy – and only then a company can file a marketing application.

Juno Therapeutics has currently 8 products in clinical trials with a chance – and Juno has enough cash at hand to complete the required process – a product launch in 2017.

Spark Therapeutics (Nasdaq; Tickersymbol: ONCE)

Make the blind see the world again. This is a non-scientific description of Spark Therapeutics’ vision. Founded 2013 in Philadelphia, Spark Therapeutics is a leader in the field of gene therapy, seeking to transform the lives of patients by developing potential one-time, life-altering treatments for debilitating genetic diseases. The therapy is injected directly into patients’ eyes, where viruses insert a working gene into cells that are missing it. The company has collaboration agreement with Pfizer for the development and commercialization. And regarding the FDA, Spark’s product candidate, SPK-RPE65, is closest to securing the first-ever FDA approval for a gene therapy.

Yaskawa Electric (Tokyo Stock Market; Tickersymbol TYO:6506)

Yaksawa is one of the leaders in industrial robotics, with roughly 20% of the market. Its machines can be found on factory floors around the world performing jobs such as arc welding, packaging, coating and assembly. Yaskawa’s headquaters are located in Fukuoka (southwestern Japan) and bear in mind, that this company is anything but just another hopeful start-up, the company was founded in 1915. However, an investor always should have the future of a company on his radar and in that matter Yaskawa has an ambitious plan: Under its ‘Vision 2025’ Yaskawa aims to double its sales and nearly triple the operating income.

iRobot (Nasdaq; Tickersymbol: IRBT)

Founded 1990 by 3 graduates from the Massachusetts Institute of Technology, the company designs, builds, and markets robots. Until February 2016, iRobot operated through 2 segments, Home Robots, and Defense & Security Robots. Then it announced that it would sell its military robotics business and focus on the consumer market. This is without a doubt the result of raised up pressure on iRobot’s management by activist investor Red Mountain Capital which owns 6% of the company. These activists can be a pain in the a.. for the management of a company, but for private stockholders these guys are usually helpful since they first demand, then press management to focus on a profitable business-strategy and strict cost-control in order to maximize shareholder-value. In iRobot there are basically two scenarios likley: The company will be sold (with a profit for shareholders) or the new strategy ‘focus on home-robots’ pays off and should lead to rising stockprices in iRobot as well.

Edwards Lifescience (NYSE; Tickersymbol: EW)

Established in 1968 and named after its founder Miles Edwards, who co-developed the first artificial heart valve. The company from Irvine, California, is a leader in the artificial heart valve devices market and has introduced a number of innovative and technologically advanced therapies for the treatment of patients with advanced cardiovascular diseases. Each year, more than 300’000 valve replacements are performed worldwide through open-heart surgery, utilizing either bioprosthetic tissue valves or mechanical valves. Edwards is highly focused on innovation. It spends about 15% of its total revenues annually on research and development. And these investments seem to bear fruit. A recent study shows, that Edwards’ less-invasive heart-valve procedure wasn’t inferior to open-heart surgery and even superior in some cases. This could result in establishing the valve as the new benchmark for the treatment of intermediate-risk patients with severe, symptomatic aortic stenosis and further strengthen the company’s position in the market and boost the stockprice even higher.

ABB (Six Swiss Exchange; Tickersymbol: ABBN:VX)

The power-, engineering- and automation company ABB (Asea Brown Bovery) is headquatered in Zurich, Switzerland. The world’s largest builder of electric grids operates in around 100 countries, employs about 140’000 people and has its roots in the 19th century. Yet its division ‘ABB Robotics’ with 5’500 employees is a leading supplier of industrial robots and provider of robot software. For tasks such as welding, handling, assembly, painting and finishing, picking, packing, palletizing and machine tending, ABB has installed more than 250’000 robots worldwide so far. The ‘star’ among these robots is called IRB 8700. The multipurpose industrial robot has a reach of 3.5 meters and is capable of handling a payload of up to 800 kg. ‘Engineering’, ‘Power’ and ‘Robots’: For investors, ABB offers already a fine combination while the second-biggest shareholder, activist investor Cevian advocates a break-up of the group’s energy and automation businesses. A move that could very well boost ABB’s stock price.

In a list of 10 stocks for the future with regard to AI and robotics I would add well known companies as number 9 and 10: Alphabet (Nasdaq; GOOG) who has – among many other things – a state-of-the-art AI with british subsidiary DeepMind and I like Amazon (Nasdaq; AMZN) due to its worship of technology-driven efficiency.

If you think about investing in ‘revolutionary’ companies, always bear in mind the potential risks of a setback. The downfall of Theranos – not a publicly traded company, but the hopeful-start-up raised over 750 million USD from private investors – could serve as a warning. Known for its ‘revolutionary’, fast, accurate and affordable blood testing using just a drop of blood, less-invasive needles and tubes, Theranos is now facing investigations by the U.S. Attorney’s office and the Securities & Exchange Commission whether the blood-testing devices were flawed and it had problems with accuracy, thereby misled investors. US regulators also proposed a 2 year ban from owning or working in any lab for Theranos founder Elizabeth Holmes and Theranos president Sunny Balwani.

Last but not least, an important rule for investors in financial markets: ‘higher risks’ doesn’t necessary equal ‘higher returns’. The higher risk gives investors mainly the possibility of higher returns. There are no guarantees. This is also true for the proposed ’10 Investments in the Future’.

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Intuitive Surgical’s ‘da Vinci’ system. The use of surgical robots could more than double by 2020.

Industrial robotics producer Yaskawa has ambitious plans and could become a highflyer at the stock market.