Top 5 Trends I Am Following In 2018

Summary

• EVs, energy storage, and EV metals.
• Blockchain and cryptocurrencies.
• Robots and drones.
• Internet connectivity and data storage.
• Social media.

This article first appeared on Trend Investing on January 22, 2018; therefore all data is as of that date.

These are the top 5 major trends I am following in 2018

1) Electric Vehicles [EVs], energy storage, and the EV metals

• Lithium miners - I expect to see some industry consolidation in 2018. Also, we will see Altura Mining [ASX:AJM] (OTCPK:ALTAF), Pilbara Minerals [ASX:PLS] (OTCPK:PILBF), and Tawana Resources (ASX:TAW) (OTCPK:TWNAF) start production.
• Cobalt miners - In 2018, we will see Glencore [LSX:GLEN] [HK:805] (OTCPK:GLCNF)/Katanga Mining [TSX:KAT] (OTCPK:KATFF) ramp up their cobalt and copper production. I expect the Australian cobalt juniors to shine. Ardea Resources [ASX:ARL] (OTCPK:ARRRF) PFS is expected by end March 2018, and Cobalt Blue [ASX:COB] (OTCPK:CBBHF) resource upgrade is expected by April 1 and its PFS by June 30, 2018.
• Graphite miners - Syrah Resources [ASX:SYR] (OTCPK:SYAAF) will ramp up its graphite production, and Kibaran Resources [ASX:KNL] (OTC:KBBRF) will progress and build its German pilot plant with up to 600tpa of unpurified spherical graphite.
• Nickel miners - I expect the nickel price recovery to continue and some juniors to progress towards production. RNC Minerals [TSX:RNX] (OTCQX:RNKLF) is quite likely to achieve a funding package in 2018 and progress towards 2019 construction, and thereafter, nickel-cobalt production. You can read more here.

China is likely to announce its internal combustion engine [ICE] ban plan date sometime in 2018. Then, by January 2019, the new China zero emission vehicle [ZEV] system will begin, boosting sales of longer range pure EVs.

Expect further advances in high-speed charging such as the Porsche Mission E that will use an 800V charger, to give 250 miles of range in only 15 minutes. The Mission E is planned to be on sale late 2018/early 2019.

Porsche Mission E - 15 minutes to charge for 250 miles of range

Source

Electric vehicles have reached a critical point of adoption with China recently hitting 3.3% market share in December 2017. This will only improve in 2018, and get stronger in 2019 with the new China ZEV system beginning. Any announcement of a ban date for ICE vehicles in China will no doubt act as a strong catalyst to boost the sector, as it did in September 2017.

2) Blockchain and Cryptocurrencies

The blockchain will most likely be the biggest trend of 2018. The blockchain is evolving to the point where all information will be able to be stored on it in a decentralized safe manner. Added to this, the ethereum blockchain allows smart contracts, which means we can do safe transactions via the blockchain. This will revolutionize how we store data and how we do transactions/contracts. The contracts maybe buying a house and verifying title, verifying personal or business IDs, or buying an item online or in a store. It will most likely be a huge evolution of how we transact in everyday life.

• Blockchain will grow rapidly into new sectors. Adoption by banks, financial services, medical, and legal industries.
• Cryptocurrencies to continue their wild ride. Those currencies that can create revenue streams beyond just selling their coin will do well. Some examples could be Selfkey [Key], Factom (Factoid), and Power Ledger.

Blockchain is becoming more widely used and accepted. This will be a major growth sector in 2018. The cryptocurrencies are harder to forecast, but will no doubt see huge trading speculation and volatility again. Most likely those currencies with secondary uses will do best, and some new ones will shine.

I will be releasing soon several articles on how best to invest in the blockchain boom that we are just entering now. One article will discuss a new blockchain ETF that offers a reasonable way to gain exposure to the blockchain. The ETF is the Amplify Transformational Data Sharing ETF (BLOK). The next article will look at some blockchain companies such as Global Blockchain Technologies [TSXV:BLOC] (OTCPK:BLKCF), Social Reality (OTC:SRAX), and Seven Stars Cloud Group (SSC) just to name a few.

Source: Techcrunch.com

3) Robots and drones

Both industrial and personal robots are expected to grow in the teens or a greater percentage. One estimate is that robots may replace 800 million workers by 2030. Expect to start seeing robots in our airports, bus and train stations, and shopping centers soon. Two excellent ETFs to play the trend are the ROBO Global Robotics and Automation Index ETF (ROBO) and the Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ).

Drones will continue to find their way into military service and other services such as delivery, aerial reconnaissance, border control, and much more.

Robots and drones will continue their stealth approach into mainstream society led by industrial robots to save costs and followed by gradual acceptance of robots in the public domain (airports, train, and stations etc) and to a lesser extent in our homes even initially just as personal assistants.

Source

4) Internet connectivity and data storage

Internet connectivity will continue to spread both globally and within our own region. We will see 5G rolled out in the USA, much more video streaming, and widespread adoption of the Internet both at home and at work. More devices will be connected thanks to the Internet of Things, our cars will grow smarter and also connect via WiFi to the Internet. Cloud storage will continue at a rapid pace as will more data centers and data storage generally.

This trend includes many elements:

• Data boom - Introduction of 5G will help accelerate the boom in Internet data flow and data storage. Cloud storage and data centers also to benefit.
• Smart cars - WiFi enabled cars.
• Artificial Intelligence [AI] - Big data analytics and machine learning.
• Internet of Things [IoTs] - Able to control machines using WiFi and machines can communicate with us and other machines.

Global Internet traffic forecast by device type 2016 to 2021

The chart below highlights that smartphones will be the major source for "Internet traffic" [data] growth. PCs and internet-enabled UHD TVs will also be significant sources. Global Internet traffic is forecast to grow at a CAGR of 26%.

Source

Mobile data traffic forecast growth by region 2016-2021

The graph below highlights most of the growth will come from the Asia Pacific region - think China, India, Indonesia, Philippines etc. Investors should take note of this and try to select stocks that have direct or indirect exposure to this region.

Source: Cisco VNI Mobile, 2017

Investors can read more in my articles "How To Profit From The Online Data Boom" and "Companies To Benefit From The Future Smart Car Boom."

A sample smart car with advanced driver assistance and WiFi

Source

5) Social media

A December 2017 article from CNBC stated: "A new report from Pivotal's Brian Wieser estimates that Google and Facebook account for 73% of all digital advertising in the United States, up from 63% in Q2 2015."

Facebook (FB) owns Facebook, WhatsApp, and FB Messenger so dominates the social media scene. Alphabet Google (GOOG) (GOOGL) has YouTube and of course, dominates search. Combined Facebook and Google totally dominate online advertising excluding China.

According to a 2017 South China Post article, Baidu (BIDU), Alibaba (BABA) and Tencent (OTCPK:TCEHY) "account for a combined 72 percent of the market's total mobile ad revenue." The article is referring to China online ad revenue and was quoting eMarketer.

In China, Tencent's WeChat and QQ reign supreme in the social media area. Companies such as Momo (MOMO) and YY Inc. (YY) and other interactive online media are smaller with potential to grow strongly.

I plan to write an article on how to invest in the social media boom soon in 2018. I will focus on some smaller names as well as on the big five - Facebook, Google, Baidu, Alibaba, and Tencent.

Global social media users (millions)

Source: Statista

In 2018, social media may see some fine-tuning such as Facebook's recent announcement to be more consumer friendly with feeds to focus more on family and friends rather than ads. Both Google and Facebook will continue to rapidly grow their subscriber base and dominate the space, whilst moving to improve ad targeting, resulting in continued strong revenues.

Other trends in 2018

• US companies to bring their overseas cash back to the US.
• North Korean and other geopolitical tensions.
• "6 global trends that can derail your portfolio in 2018." - The article discusses rising interest rates, North Korea, and a possible US trade war with China.

Conclusion

My top 5 themes for 2018 are EVs, blockchain and cryptocurrencies, robots and drones, Internet connectivity and data storage, and social media.

Early in 2018, we have already witnessed some large volatility in crypto world as well as some volatility in the lithium miners. My view is that the recent sell-offs will soon settle, and we will soon resume positive sentiment towards the sectors I outlined above.

As usual, all comments are welcome.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

Analyst’s Disclosure: I am/we are long ALTURA MINING (ASX:AJM), PILBARA MINERALS (ASX:PLS), COBALT BLUE (ASX:COB), KATANGA MINING (TSXV:KAT), GLENCORE (LSX:GLEN), ARDEA RESOURCES (ASX:ARL), SYRAH RESOURCES (AS:SYR), ROBO, BOTZ, GLOBAL BLOCKCHAIN TECHNOLOGIES (TSXV:BLOC), GOOG, FB, MOMO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The information in this article is general in nature and should not be relied upon as personal financial advice.

Comments

[BullYu]

Hi Matt, what do you think of TAR(ASX)

[Trend Investing]

melwalker - I think quality companies in both will do great....I would say cobalt has a slight advantage due to limited supply.

[melwalker]

Hi Matt, thanks for your work. What do you think of the Cobalt industry in 2018 compared with Lithium?

[Big Bad Bulls]

Matt, on the subject of EV'S. Does anyone consider the amount of money that will need to be spent on updating the grind and increasing the supply of power needed to support the EV rollout. Money needed is in the multi multi billions. Who is going to pay for all that, especially with the fact that here in the US we continue to have all the supplies we need in fossil fuels.....

[Trend Investing]

BBB - If most people charge their EV at home at night the impact is not so big. Also when you look at the cost of pollution say in China on the economy it becomes very worthwhile. But clearly countries need to increase renewable non-polluting energy sources - hydro, solar, wind, geo-thermal etc.

[zip6485]

dgavrile,
I invest in pot stocks because I understand how they make money. How to produce and prepare are
non issues to me, there are experts for that. The trend moves forward, no one can stop it.

[zip6485]

Matt,
I personally predicate Marijuana industry will perform well this year and years to come.

[dgavrile]

When I read your post and the one above (daran) I had a bliss. Marijuana usage is much simpler than crypto. I have to admit that although I have some IT security knowledge including private/public and sha concepts I was lost in the story. I think that one major risk is the fact that average investor has no clue what is all about, only buzzwords and no deep knowledge on theory and cryptography and process flows, not to mention risk evaluation.

Marijuana on the other hand , can be tricky to produce and prepare in a kind of controlled way but finally who eat, drink or smoke it ;-)

In conclusion simple things tend to thrive more successfully than sophisticated ones ;-)

[ssadaran]

Thank you Matt.

[ssadaran]

Ah well, I tried Binance and thought I'd share with the community.

On their website they say:
" Binance does not support any fiat currency (USD, JPY, etc.) trades or transactions. Only cryptocurrency may be deposited and traded on our exchange."

[ssadaran]

And sharing for what I see on Koinify :

Wipe Out: Koinify Closes Down its Cryptocurrency Crowdfunding
January 21, 2016 @ 5:17 am By Erin Hobey

Koinify, a crowdfunding platform for cryptocurrency projects, will cease operating website and data custody operations, essentially deleting all wallets and coin holdings of users who participated in campaigns and did not move their coins elsewhere.

tom ding“Following previous notice, please note that Koinify site is officially shutting down by Feb 15th, 2016. After that, all Koinify website functions and data, including wallet and any remaining tokens not withdrawn by users, will be completely wiped out and no longer available,” blogged Koinify founder Tom Ding.

Ding, who has already moved onto a new autonomous finance project called String, urged Gemz Users that “to avoid any loss of GEMZ, please do make sure to withdraw your GEMZ immediately.” To Factom Users he wrote, “To use or exchange your Factoids purchased on Koinify, you must use tools provided by Factom team directly. Koinify.com DO NOT provide any Factom access functions and none of your Factoids were ever stored on Koinify.”

The platform was setup as a crowdfunding vertical for Blockchain 2.0 ventures and projects. Koinify used the Counterparty protocol to issue project-linked tokens, known in the industry as appcoins, to raise funds. However, Koinify only managed to host campaigns for two appcoin vehicles, Getgems and Factom (“a highly regarded blockchain-based distributive application project, selling 4,379,973 Factoids to over 1,500 people in May 2015, and raising 2,278 bitcoins or around $540,000 at the time”) before ceasing operations, reported allcoinsnews Co-founder Hans Lombardo:

Hans Lombardo“The first project to raise funds on Koinify, Getgems, is a messaging application that permits users to send cryptocurrency to other members of the network. Relying on the open source Telegram application as a messaging infrastructure, Getgems raised 2,633 bitcoins by selling around 38 million proprietary tokens called Gemz in December 2014.”

The shutdown won’t impact many users, according to Lombardo. Only holders of Gemz, worth maybe one US cent per token, need to withdraw funds from their legacy Koinify wallet. Factom’s Factoids were never stored on Koinify.

“Nonetheless, cryptocurrency crowdfunding platforms, such as Koinify, Swarm and Blocktrust, have not been sustainable, perhaps a result of regulatory uncertainty or the volatility of bitcoin,” opined Lombardo. “The only current exception to this is Hong Kong-based Bnktothefuture.com, which is thriving by serving bitcoin or blockchain ventures such as Bitcoin Group, BitPesa, Factom, ShapeShift, Startchat, Startcoin, Satoshi Point, Storj.io,, Tibdit, UnoCoin, Uphold, and most recently Synereo.”

[igor555]

these are not vale or glencore or abx. these are junior miners that trade on speculation.
basically lottery tickets.

[Michu]

The mining stocks are interesting.
The financial statements, however, look ugly. Those companies that I checked have rather high debts, no profits, no free cash flows, high price to book ratios, little turnover (high price to sales ratios) and probably also a high risk of bankruptcy. All these factors actually suggest that performance will not be very good. However, I have little experience with (junior) mining companies. Are these lottery ticket stocks? Lottery ticket stocks have on average very bad returns. see also here: http://bit.ly/2CY5wLa
Aren't there any commodity companies with strong financials (low debts, low p/e, p/s, p/cf etc)?

[Trend Investing]

Power Ledger is available on Binance. Factom on Koinify.
http://bit.ly/2CWDiAu
Typically you will purchase using a credit card.

[ssadaran]

Hi Matt.

This is an excellent and intriguing article. Would you please suggest exchanges where cryptocoins such as KEY , Factoid, and Power Ledger could be purchased for fiat currencies?

Thanks

[DKB2]

Are there any avenues for investing in High-Speed-Charging? Preferably in a REIT type format.
Or is it too early for this?
Charging plazas where you can stretch your legs, use the restroom, grab a bite and coffee after driving for 3 hours or more (250 mi @ 70 MPH).

[Trend Investing]

DKB2 - I am not sure yet. It may be a topic for an article soon.

[sc21]

solid state batteries are generally very quick charging and would void the need for extensive charging facilities. Also with the growth of self driving autos owed by major holding companies, the demand for charging will decline as well. Bottom line is that charging facilities could decline in importance fairly soon. That said solid state batteries are a bit down the pike.

[dvdglls]

Matt, I’ve enjoyed and profited from your cobalt analyses. I was buying and holding Formation Capital (FCO, now ECS) since the late 1990s; sold most at $1.40 for $$$. Now holding a lot of Fortune Minerals. For your upcoming blockchain piece, I hope you would look at Blockchain Technologies Limited (TSXV:BTL) and their patent-pending InterBit product. Cheers!

[Trend Investing]

Ok will do. They are now on my Blockchain watch list. Cheers.

[uptown2emerson]

super!

[thomashogan640]

I am waiting til after earnings to buy momo. It always drops for some reason. But since it’s me I’m sure it will pop cause I’m always wrong

[Queenstown]

Interesting thoughts Matt and I quite agree on your megatrends. Still I'm not sure Blockchain is that big in terms of disruption and I would also add Recycling and water management for coming trends that will impact the stock market

[AlieGee]

"2) Blockchain and Cryptocurrencies"

I see it going higher as more suckers buy then the bubble will pop !

[igor555]

any thoughts for FTMDF in 2018?

[Joslaat]

very good article. Thanks Matt

[11146471]

Spot on Matt!