South by Southwest (SXSW) is currently ongoing in Austin, Texas. SXSW describes itself as "fostering creative and professional growth alike. SXSW is the premier destination for discovery." Membership for this conference has grown from 9,000 members in 2009 to 30,000 members in 2013. This is the conference where Twitter and Foursquare were jumpstarted. Venture capital funds and investors scour the conference for the latest in technology, looking for the next Google (GOOG) or Facebook (FB) in order to make huge investment returns.
So it is no wonder that everyone is seeking and asking about the next "hot thing" in technology.
It is no surprise that the hot topics at SXSW are Augmented Reality and 3D Printing as the buzz is now about technology and industries that will target people's "senses." That is, products that they can design and create on their own, objects that they can touch virtually or physically, a new way of hearing (look up Google's "bone conduction" patent), the beginning of mood technology (using technology to tell you what somebody's mood is) and a new way of seeing.
Augmented Reality (AR)
Augmented reality is basically a thin line between computer generation and the real thing. AR enhances what we can see, feel, hear, and smell by adding graphics, smells and sounds to what already exists in the real world. Thanks to cell phones and video games, which are behind the development of AR, this technology is helping to improve safety for police officers and soldiers, and expanding a new world of entertainment for everyone by placing computer-generated graphics into their field of vision. From billboards to pizza boxes to Mitsubishi Electric (MIELY.PK) implementing 3D maintenance instructions for its service technicians, even businesses are using this exciting technology to enhance marketing efforts.
Google is expected to release its Google Glass at the end of this year. Google Glass is eyewear that allows users to view the same things they would normally see on their smartphone. Apple (AAPL) already has a place in the AR game with its AR-Maps that uses the iPhone's GPS, compass and gyroscope to create an augmented reality view. Apple also has a patent for an Augmented Eyewear device that will compete with Google, with rumors naming it the "iGlass".
In the app world, IBM (IBM) too is on board the AR bus. The company recently announced that it is releasing an augmented-reality app that uses image recognition to classify items for sale that lets people find out details such as nutrition information and sort them by parameters such as price.
In the Augmented Reality software world there is Infinity AR, Inc. (ALSO.OB). Infinity AR has the platform to connect Google's Android Glasses to an iPhone or iPad. They also have advanced facial, image, and mood recognition apps that are set to launch in the coming weeks.
While Google, Apple, and IBM have market caps in the billions of dollars, Infinity AR trades at less than 50 cents and I would consider it a speculative stock with plenty of reward accompanied with plenty of risk.
3D Printing has been hot all year. This is a sector with unlimited potential and expansive growth. We would rather blame others for missing the boat on the hot stocks that passed us by, but in reality we can be our own worst enemies.
Two of the leaders in 3D printing are 3D Systems Corporation (DDD), the largest 3D printer manufacturer in the world, and Stratasys (SSYS), which weighs-in at number two. Both started out at roughly the same time and both have enjoyed a nice run. Employing cutting-edge technologies, these companies have emerged in a commercialized field that allows real, solid objects to be created one layer at a time from digital data, appropriately called direct digital manufacturing.
3D Systems, which in March 2010 was trading at $4.87, is today trading in the ballpark of $35. Stratasys, which in March 2010 was trading at $26.00, is today trading at about $72. While the upward trend is waning, new opportunities are knocking on the door.
Organova Holdings, Inc
Similar to 3D printing, which uses plastics or metals to construct objects, 3D Bioprinting essentially uses "bio-ink," or living cell mixtures to form human tissue that is used to build a 3D structure of cells, layer by layer, to form tissue. Dubbed "the new industrial convergence," 3D Bioprinting is the morphing of manufacturing and medicine and represents an opportunity at advanced medical developments. This new technology uses cells from a moving printer head to place the cells in the correct location. The thought in the medical world is that this printed tissue can be used to make organs for organ replacement.
It is obvious that 3D Bioprinting is here to stay and Organovo Holdings, Inc. (ONVO) is a prime example of that. Organovo Holdings is the leader in this innovative industry with its NovoGen MMX Bioprinter. A public entity for just over a year, shareholders have taken a volatile ride from lows in the area of $1.50 to highs above $10 per share and everywhere in between, emblematic of the gains (and losses) that come with upstarts.
Organovo expects to get approval for simple tissues, such as skin, muscle, and short stretches of blood vessels within five years. They expect to move from simple tissues to producing more complex body parts such as livers, kidneys and hearts. Although the company has about $10 million in the bank, it's going to need to continue to make efforts to clean-up its balance sheet to achieve these lofty milestones because it's going to take a lot more than $10 million to produce the world's first 3D-matrix heart.
A great sign of progress was Organova's recent partnership with Autodesk (ADSK). Autodesk is a reputable company with a $9 billion dollar market cap. Dealing with an innovative and talented company such as Autodesk can only add benefit and quickness to Organova's trials and research and was much needed to help Organovo transition its arcane coding methods up to speed with its overall futuristic technology.
While 3D Printing has already been found, Augmented Reality is an undiscovered find. Organovo is on the right path with its Bioprinting initiatives, but is still facing years of R&D and remains at the mercy of regulatory hurdles at the FDA to bring products to market. Like Benjamin Graham, investment genius, mentor to Warren Buffett, and author of The Intelligent Investor, is quoted as saying, "The investor's chief problem - and even his worst enemy - is likely to be himself." We've all experienced regrets about missed investment opportunities and delayed moments of pulling the trigger on a sure thing. The crystal ball business has been in a bit of a lull as of late so finding that sure thing is a daunting task unless you know where to look. Thankfully for us investors, where to look has been simplified for us by the great wisdom of the likes of Jason Zweig, Phil Town, Benjamin Graham, Warren Buffett, and Burton G. Malkiel. Their work boils down to: Buy a great company at an attractive price. This includes finding a great company with good management and one that offers a great product or service that is doing something that either no one else is doing, or is doing it better than everyone else.
With that, investors should be taking a discerning look at companies like Organovo and Infinity Augmented Reality for their future potential as pioneers in industries to see if it is a portfolio match.
Micro cap stocks can be highly risky and are harder to predict than their larger counterparts. Currently Infinity AR and Organovo Holdings are microcap companies. These stocks are highly speculative and may be issuing more shares in the future to fund their business. I would say for the beginning investor it is better to trade stocks listed on a higher exchange such as the NYSE. These stocks are more liquid, have independent directors, and provide more information to the public.