It's that time of year… We are almost in the last month of the 3rd quarter, and this is the time of year when professional investors look forward. No, not to 4th quarter - that's way too amateurish. Real investors start looking at next year right about now, and try to figure out what trends and events may impact the market and specific stocks. And while most of the "Lists of Stocks to Watch" or "Trends for Next Year" reports don't come out until late December or early January, the fact is that by that time it is too late for most investors… that train has already left the station because the institutional investors have already climbed aboard and taken all the good seats.
So without further ado, I will present my very timely, "List of Trends to Watch in 2014, and Where a Smart Investor Should Invest." It's a catchy title, don't you think?
First let me say where the trends won't be: They won't be in alternative energy. They won't be in bio tech. In fact, they won't be in anything with "Bio" in its name.
While alternative energy exists today, such as wind, solar, alternative fuels, biomass, clean diesel, electric cars, and much more, American's simply aren't ready to give up convenience for savings - whether it's saving money by buying less gasoline, or saving the environment. So until the major oil companies like Exxon-Mobil, Shell, Chevron and others get into the alternative energy game and make it as easy to fill up with an alternative fuel (or charge up) as it is now, we won't see a widespread adoption. And as long as the oil companies can make billions upon billions with the status quo, they are in no hurry to change. Don't expect to make money on alternative energy stocks in my lifetime… or yours.
Here's another interesting tidbit: I spoke recently with the chairman of a company that can take a city's garbage and convert it into electricity, with no pollution. To make this sweet deal even better, the byproduct of this process is a natural gas that can be sold and used as a fuel.
This technology exists today. It solves several problems: Reducing the trash in overcrowded landfills, and providing a clean, reliable source of electricity.
Sounds like a winner, right? Why wouldn't cities everywhere adopt this technology? The answer is simple: There are powerful companies making boatloads of money providing those services today. They have powerful lobby groups and donate tons of money to keep politicians from making any change that would diminish their power or profits.
So as much as you would like to think that these technologies are going to change the world and you will be a part of that profit stream as an investor, it's not going to happen. Not in my lifetime… or yours.
So what can we look for in the years to come that can make an impact and importantly, doesn't have huge roadblocks to implementation (like major corporations making billions with the status quo)?
Here now is my list of areas that I think will provide excellent growth and present an excellent potential investment. Please don't take this as investment advice. These are my opinions only. Consult your own advisor before making an investment, and don't write to me if my predictions are incorrect. I don't have a crystal ball (no one does). These are just my researched, well-thought-out opinions. Take 'em, leave 'em, but I don't care to debate them.
BIG TREND NUMBER 1:
The Baby Boom is getting old. Very old. And many of them are losing their hearing (Too many rock concerts and a lifetime of loud music). Accordingly, I like companies that are developing newer and better hearing aid devices. These are not your grandfather's hearing aids. They are smaller, sleeker, provide much better performance, and not a stigma like they used to be. In fact, they are now somewhat of a badge of honor. "I made it through the '60's!"
The company to watch is the Sonova Group (Sticker Symbol SOON.SIX). The Sonova Group is the broadest hearing care provider in the world. The company has an exceptional track record in achieving strong financial results. Serving a growing global market with a comprehensive range of innovative hearing solutions, Sonova is well positioned to achieve sustainable success in the long run.
BIG TREND NUMBER 2:
Automation… Think about it: You get your money from an ATM. You can check yourself out at the grocery store with automated systems. Red Box is an automated "store" that rents DVDs and is so much a part of our culture and routine, they put Blockbuster down for the count.
Today, in so many ways, automation is making life easier for people everywhere. And here is an interesting tidbit (just in case you thought I might be wrong). No less than Dr. Nadia Shouraboura, former head of Supply Chain and Fulfillment Technologies for Amazon.com, has started a new automated retail company. With their technology, there is no need to sift through piles of clothes or wait on a salesperson. Just tap the clothing you like and your items will be delivered in under 30 seconds. This isn't a publicly traded company, but I list it here because when executives from Amazon are jumping into this industry, you had better believe that a new trend is forming.
My favorite in this space continues to be AVT (OTC MKTS: AVTC). AVT is pioneering several new platforms that are fundamentally changing the retailing experience. And the best part, there are no big obstacles to their success - like there are with alternative energies and fuels.
AVT has developed both simple and intricate systems that give customers unfettered access to items as diverse as cupcakes to propane tanks.
Consider the system that AVT developed for Rug Doctor (now in thousands of locations nationwide). Now, instead of waiting for a store employee to assist with a carpet cleaning rental system - which hassles both the customer and the worker - now anyone can get the machine with a simple swipe of a credit card. A door opens up, the machine is accessed, the customer is happy. Returns are equally as easy.
This automated system has fundamentally changed the way people rent and return carpet cleaning equipment.
Then AVT did the same thing for Blue Rhino and the propane industry. The way people purchase and exchange propane tanks has now fundamentally shifted forever, thanks to AVT.
The company has also turned to the enormous coffee industry and now provides gourmet coffee at a touch of a button. Redbox has also entered this arena, so you know there must be enormous growth potential in this industry. However, the problem with the Redbox coffee system is that the coffee doesn't taste all that great. They won't get repeat business.
The AVT Marley Coffee system not only has gourmet blends, but one of the most recognizable brand names in the world. Advantage: AVT.
Lastly (yet perhaps most importantly) is the new UShop system developed by AVT. The UShop is like Redbox in that it can completely change the way people purchase certain types of products. AVT's UShop is to retailing what Redbox is to DVD rentals... an industry changing product with a profound effect on consumer shopping habits and preferences.
This automated store represents the future of retailing. It has a selection of highly desirable items in a dynamic presentation (the machine has music and a light show going on that attracts attention and commands interest). The UShop also has online shopping…. That's right, online shopping from an automated store.
The advantage to this system is that consumers are:
1. Drawn to the machine by its style and appearance
2. Interested in the product selections
3. Further engaged through the online portal
4. Much more likely to make a purchase
This machine, the first that I know of that combines self-service retailing with the universe of online retailing, is going to catch on like wildfire.
AVT is down from their 52-week high after last quarter's results didn't meet expectations… However, that doesn't worry me. The company continues to invest in the development of new products, and has a powerful patent that could generate millions on its own in licensing deals. I expect this company to hit $5.00 a share in the near term, and $10 or more in the next 24-36 months. That's a 400% increase from today's prices.
BIG TREND NUMBER 3:
Think about this… are there any products that are about to come on the market, that have a proven customer base, and a large pent-up demand?
During the prohibition, alcohol was outlawed. When prohibition was lifted, the place to invest was in the liquor industry.
Today, there are already 20 states that have legalized medical or recreational marijuana. . . and the pendulum is swinging in the direction of more states legalizing the substance.
This is the new gold rush, or the "green" rush as the Wall Street Journal stated. However, not all companies in this industry are created equal. Some are involved with the cultivation of the actual plant. This can cause some serious risks, as the plant is still outlawed by the federal government. And while these companies may skyrocket if the Feds legalize marijuana, there are better, safer bets in this industry.
I like the companies that are supplying technologies, products and services to the legal marijuana industry.
Consider Medbox (MDBX), the company that provides software and storage systems for running marijuana dispensaries.
Once the media darling because they love big headlines, and used to claim that Medbox is providing marijuana out of a vending machine, the truth is far from that.
Medbox provides systems that the government actually loves. Their storage and compliance machines are not vending machines… they actually sit behind the counter. The reason that the government loves these systems and has actually recommended them in some instances, is that they provide an instant, unalterable record of every single purchase. So no hiding of profits, no avoiding taxes, and no dispensing to people that don't have a legitimate prescription.
In an industry that is in its infancy and facing tremendous scrutiny, Medbox brings legitimacy and transparency, and is doing more to help bring medical marijuana out of the shadows and into the world of acceptable companies, than anyone else in the industry.
They also have products that are targeted to traditional pharmacies, doctor's offices, and the pharmaceutical industry.
This stock is way down from their 52-week high, and I expect them to climb back up there in the near term.
So there you have it… my 3 Big Trends for 2014.
Don't say I didn't give you a chance to get in early.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.