Investment to take advantage of the Nanotech Revolution

How are the nanotech stocks ? Do they have a have genuine profit-potential.

Nanotechnology will indeed be a revolutionary technology, ushering in another age of head-spinning, breathless change in everything from computers to medicine to clothing to housing.
This being a multidisciplanary technology will require the realy big big companies ti invest heavy. Unline the computer, IT or electronic revolution, the nenotech is going to have many dimentions.

This multidisciplinary technology will revolutionize social, economic, political and personal life by the year 2015 as predicted by Rand Corps (full-throttled report here.).

As an investor putting money to work in the here and now, however, Ive got just one little problem: I cant find much actually to invest in. Worse, most of what is touted and hyped as nanotechnology stocks is rubbish.But that doesnt mean you cant invest in the technologies of 2015 today. You just have to be a bit unorthodox to do it. Let me give you my personal five-step approach to the nanotechnology revolution to come.

To know more about this field its important to have a greater knowledge and know more than the buzzwords. It helps to have some idea of what the technology is before taking cash out of your wallet.

Nanotechnologies use really, really, really tiny building blocks, far smaller than used today to manufacture most things. How tiny? A nanometer is a billionth of a meter. A human hair is 1,000 times as wide as a 50-nanometer transistor.

At this scale, manufacturing takes on a whole new meaning: rather than snapping together pieces of plastic, pouring hot metal into molds or combining petroleum-derived olefins to make plastics, nanotechnology creates and then builds new materials by manipulating individual atoms. And those new materials are likely to show startling new properties. Nanotechnology will, for example, produce materials that change shape with temperature shifts, sensors that shift frequency to match a signal, nanotubes that are 100 times as strong as steel at one-sixth the weight and logic switches for computers made out of synthetic organic chemicals.3 industries with a head startLook for industries where nanotechnology could result in marketable products within 10 years. (Why 10? Anything further out comes with so much uncertainty that you might as well select stocks at random.)
There are three strong candidates.

Biotechnology, where the knowledge of the human genetic code and the ability to manipulate drug compounds at the atomic level could lead to new efficiencies in drug discovery and, ultimately, to designer drugs.

Semiconductors, where new nanomaterials could extend the lives of current chip technologies. They also might lead to whole new approaches to computation such as using the quantum-level properties of matter that start to emerge at these scales to create logic devices.
Industrial materials, where the ability of nanotechnology to custom-design the physical character of the materials that go into things such as visual displays, touch pads, sensors and signal processors could produce new products with new functions at a fraction of current costs.How close is a marketable reality?Try to handicap the odds that any of these three areas will produce marketable products in volume and at a profit in the next decade. Heres my ranking, least likely to most likely: Least likely: Semiconductors. Its clear that current semiconductor heavyweights Intel and IBM (IBM, news, msgs) take the technology seriously because they both are spending big research bucks in the area. But, IBM told Merrill Lynch technology analyst Steven Milunovich in February, the company thinks the first products based on nanotechnology are about seven years away. Even then, these new products are likely to be in memory and storage rather than in computer logic. Thats because current technology for making more powerful and cheaper computer logic chips looks good until 2015 or so. That creates a huge barrier to entry for logic chips based on innovative and disruptive technologies.

Somewhat likely: Biotechnology. Human Genome Sciences (HGSI, news, msgs) is an almost perfect litmus test. Human Genome began as a company dedicated to building a library of human genes to discover which of these genes produced proteins that were capable of changing the behavior of individual human cells. Each protein that had that ability was a potential drug candidate. The second stage of the companys life began when it decided to develop some of those potential drugs itself, thus combining gene sequencing, protein screening, drug development and drug manufacturing under one roof. The company now has eight potential drugs in clinical trials; five of these are derived from the genomics approach. We wont know for about five years if this gene-based approach is likely to yield significant drug discovery advantages and investor profits. The best bet for investors is to watch this company from the sidelines to judge the value of nanotechnology in this sector. Its worth noting the CEO recently left the company.Most likely: Materials. Its the nature of the materials market that makes me so positive on nanotechnologys near-term potential in this sector. The market is fragmented with no dominant standard and no dominant company. It feeds into a diverse and growing set of end markets that range from aerospace companies to flat-screen makers. Many of these end markets are showing the kind of huge year-on-year growth and downward cost pressures that drive innovation. And in the materials field, companies have already brought nanotechnology-based products to market.

In 2003, General Electric (GE, news, msgs) began selling conductive powder paints, a nano-engineered material, to auto makers and their suppliers as a replacement for the metal and plastic substrates now in use. GE already sells about $1.5 billion in plastics to the auto industry annually, so the company clearly has the clout to bring this new product to market.Theres an important downside to watch for in this sector: New nanomaterials are likely to be very disruptive to existing segment leaders. Watch out for companies that are underspending on R&D and are vulnerable to getting blindsided by new products from competitors.

The most exciting prospects are still privateThat is, you cant buy them yet.

Want to play nanotechnology in the materials sector? Here are names that you can buy now: General Electric, 3M (MMM, news, msgs), Dow Chemical (DOW, news, msgs) and DuPont (DD, news, msgs). These companies are spending research and development bucks to discover nanotechnology materials. On their track records, investors can be sure that theyll get them to market and sell millions of dollars of these products to new and existing customers. Same is true if youre looking for a nanotechnology investment in the biotech field right now. Id recommend Johnson & Johnson (JNJ, news, msgs), which, thanks to its 2001 acquisition of Alza, is the leader in using nanotechnology to deliver drugs. But these arent exactly the nanotech stocks to stir an investors soul. Sure, new products from these technologies will add to earnings. However, these are already huge companies, and their stocks wont get huge pops from any single product. To get that youll have to wait until the current generation of private nanotechnology companies sells stock to the public. The best of nanotechnology companies have been funded by private venture capital firms: About $300 million went into nanotechnology from this source in 2003 according to Lux Research. These companies wont go public until the venture capitalists think their products and the stock market are ripe.Some names to watch for include NanoDynamics (nanofuel cells), NanoScale Materials (chemical cleanup), ZettaCore (molecular memory) and Nanosphere (sensors and diagnostics). (Another alternative is the nanotech instrument companies such as Veeco Instruments (VECO, news, msgs) that make the equipment such as atomic force microscopes needed by nanotechnology researchers.)

Beware the hype cycleNanotechnology has started to get the star treatment -- magazine covers, special reports, breathless newsletters, special stock indexes -- thats reserved for investment fads. Its already clear that simply putting the word nanotechnology in a company name is enough to create a speculative rocket. But you aint seen nothing yet. The dearth of exciting publicly traded stocks means that the IPOs of venture-capital funded but now-private nanotechnology companies will be wildly over-subscribed and wildly volatile. Keep your wits about you, and remember the lessons of the Internet boom: The technology was real even if some of the companies werent, and, two years after the hype peaked, investors could pick up the best for a tenth of their highs.

The future is coming. And you can buy a piece of it now. But thats no reason that you have to overpay for it.

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