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The Power of Small-Cap Innovation…
[A letter from Wall Street Daily Founder, Robert Williams]
In 1939, the late Sir John Templeton took $10,000 and invested it equally among 104 stocks trading for $1 or less. Templeton was betting that the market’s tiniest innovators wouldn’t just survive the Depression, but that they’d lead the way out.
Although 34 of the companies went bankrupt, Templeton’s investment grew from $10,000 to $40,000 over the next four years.
Templeton harnessed the power of tiny innovators. He understood that the financial upside of genuinely innovative companies would far transcend the negative impact of the duds.
So if you’re avoiding the market’s tiniest innovators, well… you’re costing yourself thousands. Perhaps even tens of thousands.
As market history proves, innovation is always rewarded with higher share prices. In fact, you’ll be hard pressed to find a single company over the last 200 years whose earnings expanded, yet its share price didn’t follow suit.
Microsoft. Apple. Cisco. All once tiny innovators, they now add hundreds of billions of dollars to global GDP, and provide jobs to over a million people.
More recent examples of innovators that not long ago traded for less than $1/share include…
- True Religion (TRLG) is an innovator of designer jeans worn by Megan Fox and Angelina Jolie. The company was recently acquired by TowerBrook for $835 million. The stock once traded for a single penny ($0.01) before blasting to over $32/share. Talk about breathing life into your retirement? Imagine earning 319,000%.
- Monster Beverages (MNST) sold more than $2 billion worth of energy drinks last year and employs over 1,200 employees. The stock once traded for pennies before going vertical to over $138/share.
- Medifast, Inc. (MED), an innovator of weight-loss solutions, is endorsed by a network of over 20,000 doctors. The stock once traded for $0.14. Shares recently hit $33.
What do all of these innovators have in common? They’re classic first-movers, which means they’ve gained dominant positions within untapped, billion-dollar markets.
Innovation never disappoints.
That was the battle cry upon which I founded Wall Street Daily 10 years ago at the top of the oil boom. And straight through the Financial Crisis, the Euro meltdown, the Brexit – into the prevailing bull market, the relentless pursuit of innovation remains our core mission.
I’m especially bullish on three specific industries at the moment.
Innovation is Extra Hot Here…
The Virtual Reality Boom. The second I put on Facebook’s Oculus Rift headset, I knew that the world would radically change to adopt the technology. Yes, it’s that innovative.
Although the Rift is enjoying a first-mover advantage, make no mistake, the world’s biggest technology players are planning an all-out assault on the market.
Apple just spent millions to acquire the engineering team at Metaio – a software company known for having dozens of virtual reality patents. It also bought private firm, PrimeSense, whose engineers are famous for their design of Microsoft Xbox’s motion sensors.
Google is eyeing the low end of the headset market with its launch of Google Cardboard, which provides VR enthusiasts a head-mounted viewer for under $25.
Disney made a $65-million investment into virtual reality startup Jaunt, with the goal of bringing “live-action shows, movies and sports to the emerging medium,” according to The Los Angeles Times.
Sony plans to release its new headset – called “Project Morpheus” – in October 2016.
Stay tuned to Wall Street Daily for thorough coverage of the industry’s smallest innovators, where the real fortunes will be minted.
The End of the Antibiotic Era. The World Health Organization calls the rise of antibiotic-resistant infections “a problem so serious that it threatens the achievements of modern medicine.”
While it’s scary to even think about incurable infections, the rise of antimicrobial resistant bacteria will force scientists to innovate.
Without medical innovation, transplant surgery will become difficult, if not impossible. Simple operations, such as a cyst removal, will be fraught with risk once again. The flu virus will wipe out the elderly, as will many other ailments associated with old age.
Fortunately, tiny innovators are already hard at work.
In fact, one micro-cap company has already created an antibody that mimics the defense proteins inherent in the human immune system. This antibody is a ruthless bacteria killer, and it’s virtually impossible for it to ever develop resistances.
Wall Street Daily will track this lucrative race for new “super antibiotics” very closely.
The Robotics Revolution. Certain industries are breeding grounds for innovation, and manufacturing is chief among them.
By raising the minimum wage, the government is indirectly advocating automation in the labor force. Put simply, it’s increasingly cheaper for companies to use robots rather than humans.
Take the auto industry, for instance. Robot density – a measure of the number of robots per 10,000 manufacturing workers – already tops 1,000 in the United States, Japan, and Germany.
These figures are only rising, too. In fact, industry analysts predict that the share of tasks performed by robots will rise from a global average of around 10% today (across all manufacturing industries) to around 25% by 2025.
Thanks to advances in technology, up to 85% of production tasks can now be automated. And if robots can do it, they eventually will.
All told, the global industrial robot market is worth nearly $11 billion today. And it’s expected to grow at an annual rate of at least 21% per year.
Wall Street Daily will document the rise of robots, and help to identify the top innovators in which to invest.
Research You Can Bank On…
Tiny innovation companies – by virtue of their immense competitive advantage and being so well-entrenched within their market – represent the very top of the profit food chain.
Over time, no asset class has rewarded investors better. Not common stocks, not bonds, not real estate, not gold, not old Master’s paintings, not collectibles… nothing.
Led by Wall Street Daily’s feature writer, David Dittman, we’ll be tracking this hyper-lucrative niche of the market every Monday through Friday.
Expect original, actionable ideas based on superior insights into exploding new industries, and we’ll even show you how to get invested.
We learn facts others don’t, we see things differently, and we do a better job of analyzing them.
Now that’s research you can bank on.
Founder, Wall Street Daily
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