In a hurry or on the go? Listen to an audio excerpt of this article by hitting the play arrow.

 

In the legendary sci-fi movie Fantastic Voyage (1966), a submarine crew is shrunken to microscopic size and injected into the bloodstream of an injured scientist to repair damage to his brain. When I first saw Fantastic Voyage as a kid, my imagination was set on fire. (Raquel Welch’s contribution to the acting ensemble piqued my young interest as well.)

But this technology is no longer the stuff of Hollywood fantasies. “Inner-space” devices are all around us…and maybe already inside you.

It’s called Radio Frequency Identification (RFID), which uses tiny transponders called “tags” to pinpoint and track objects. Each miniaturized tag, many weighing as little as a grain of rice (0.0725 ounces), sports an embedded antenna that transmits and receives radio waves from an RFID transceiver.

According to research firm Statista, the global market for RFID is on track to exceed USD 41 billion by 2025, up from about USD 10 billion in 2014 (see chart).

Below, I examine a well-positioned RFID investment play that offers both growth and downside protection. First, let’s explore the exciting ramifications of this disruptive technology.

Tag! You’re it…

Miniaturized, wireless tracking devices for medicine, retail, manufacturing, transportation, logistics, and a wide range of other uses represent one of the hottest investment trends you can find.

Doctors use RFID sub-dermal implants in patients to monitor their whereabouts, bio-functions and medical history. Hospitals, keen to meet efficiency standards, use RFID to trace bio-specimens, supplies and equipment. Pharmaceutical firms use RFID to track millions of proprietary drug compounds in their product libraries. Laboratories use RFID to track tissue or fluid samples.

RFID tags also are used in tollbooths, at the gas pump, in retail stores, on automaker factory floors, and on the farm inside livestock. In the aviation field, they’re used to track aircraft parts and passenger bags.

Many businesses, from retailers to hospitals to factories, must keep increasingly close tabs on their inventory just to survive. Notably, Amazon (NSDQ: AMZN) has set a new standard in tracking and delivery via RFID.

A “Fantastic Voyage” of profits…

Wireless tracking systems such as RFID are a multi-year investing bonanza, especially as they are integrated into the Internet of Things.

All processor-based systems (think handsets, wearables, GPS devices, RFID tags, automobiles, airplanes, medical devices, HVAC controllers, and smart meters) continuously generate machine data, both structured and unstructured.

WATCH THIS VIDEO: 5 “Disruptive” Tech Trends of 2023

Analysts estimate that by the end of 2022, the installed base of web-enabled “things” exceeded 200 billion worldwide, including some 30 billion installed autonomous devices, largely driven by intelligent systems that collect data across both enterprise and consumer applications.

The growth stock winners of the future will be the companies with disruptive technology, offering software platforms that enable organizations to gain operational intelligence by sorting through all of this data.

Sometimes disruptors are found in unlikely places…

Who says packaging companies are boring?

Maybe you’ve never heard of Avery Dennison (NYSE: AVY), but it’s the world’s biggest manufacturer of RFID tags. With a market cap of $14.6 billion, Avery Dennison also manufactures and sells everyday items such as pressure-sensitive labels, packaging products, and office supplies for a wide variety of industries.

Those products may seem boring, but many companies couldn’t function without them. An old-line legacy company in the conventional packaging industry, Avery Dennison’s diversified product line conveys ballast during these difficult economic conditions.

Even if the economy slows this year due to inflation, higher interest rates, and the Russia-Ukraine war, customers will still clamor for the company’s products during this late cycle of the post-COVID recovery.

Avery also has maintained its competitive edge by embracing the research and development of RFID. Avery foresaw the rapid growth of RFID applications long before anyone else and now dominates the field.

With cash on hand of more than $197.8 million (most recent quarter), the company can continue its long-term growth strategy of acquiring small tech companies that are developing innovations in RFID technology.

The company should thrive in the post-COVID economy, when technologies such as RFID will be in even greater demand. The stock’s 12-month forward price-to-earnings ratio is about 18. The analyst consensus has set a one-year price target (on the high end) for the stock of $233, which from current levels would represent an increase of roughly 30%.

The dividend yield is a decent 1.65%. In this volatile bear stock market, AVY is a value-priced “defensive growth” play, and a safe, long-term bet on disruptive technology.

Editor’s Note: My colleague Dr. Joe Duarte has developed a way to generate cash for his followers, week in and week out.

As chief investment strategist of our premium trading service Weekly Cash Machine, Dr. Duarte leverages a “fear-based” algorithm that uncovers instant cash codes that could generate up to $1,600 per week in extra income, regardless of how the economy performs in 2023.

In fact, Dr. Duarte’s methods actually thrive on market volatility. Get the details by clicking here.

John Persinos is the editorial director of Investing Daily.

Subscribe to John’s video channel: