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I Found a Pot of Gold – At the Consumer Electronics Show

9 | By Michael A. Robinson

At the start of each New Year, if you’re looking to see what’s in store for the global high-tech sector for the 12 months to follow, there’s no better place to look than the International Consumer Electronics Show (CES) in Las Vegas.

Early each January, CES is the place to go to see what the sector’s top companies have planned. And it’s also where to go to ferret out new companies, new products or innovative new services that could create entire new businesses – spawning windfall-level profits for investors who are able to decipher the high-tech “tea leaves” emanating from this massive trade show.

That’s why – every year – I pay careful attention to whatever’s being unveiled at CES.

And from this year’s trade show, which concludes today, I’m watching three trends that represent major high-tech investments for our readers.

In this Strategic Tech Investor, I want to introduce you to each of them – since we’ll be talking about all of them for the rest of this year … and beyond.

And I’ll even tell you about one stock that I believe could double in less than three years.

When Tech Meets TV

In talks I’ve given to investors, I’ve described CES as a kind of “report” you can use to assess cutting-edge tech trends, since the companies and products that make waves at CES are important indicators of what to watch for in the months that follow.

Based on the excitement surrounding it at CES this year, a new technology known as ultra-high-definition TV (UHDTV) is on the verge of a “breakout” in the U.S. market.d

This technology also is known as 4K because these new, sharper-definition TV sets boast 4,000 horizontal lines of video, making them roughly four times sharper than currently used high-definition (HD) images.

At this year’s CES, none other than tech giant Netflix Inc. (NasdaqGS: NFLX) put its support behind 4K technology.

This is a big deal – for one good reason.

By putting its support behind 4K, Netflix is addressing a major stumbling block for mass adoption of UHDTV.

I’m talking about the lack of content.

Right now, you see, there are no television shows, DVDs, or streaming movies in the 4K format. But with Netflix’s help, that’s about to change.

Netflix used CES to reveal its prospects for 4K video streaming by showing a “trailer” for the second season of its original series House of Cardsfilmed in Ultra HD.

The king of online video says it will stream the show in 4K beginning next month. At present, no consumer-level devices can support playback in 4K.

But that’s expected to change quickly.

Though it didn’t reveal an introductory date for new UHDTV sets, Netflix said it has forged partnerships with such major firms as Sony, LG, Vizio and Samsung to support the new format for mainstream broadcasts.

Those set-makers, Netflix said, only need to add a special “decoding” device to a series of monitors that should begin shipping in the U.S. market in the next few months.

For their part, TV manufacturers like Sony and LG brought a wide range of new UHDTV sets to CES.

The sticker prices for those new TVs have been high – even stratospheric. But as production ramps up, the prices for these 4K sets are starting to drop.

At last year’s CES, makers showed off early models with price tags as high as $25,000. This year, however, Sony and LG displayed sets with price tags as low as $3,000 for models with displays in the roughly 50-inch range.

I believe the combination of new content from Netflix (and others who will follow suit) and lower prices will serve as the igniting catalyst for UHDTV sales.

NPD DisplaySearch sees nearly a sevenfold increase next year alone. NPD estimates that sales came in at 1.9 million for 2013, and predicts that sales will rise to 12.7 million in 2014.

What Technology Goes With This Tie?

Don’t worry if you’ve never heard of Gary Shapiro. Most investors have no idea who this guy is.

But Shapiro offers great insight into the tech you see at CES. After all, he serves as chief executive of the Consumer Electronics Association, which has sponsored CES since 1967.

And Shapiro is bullish on a technology you and I discussed just a few days ago.

Of course I’m talking about wearable tech. And Ambarella Inc. (NasdaqGS: AMBA).

Thanks to its extreme-sports “helmet cams,” Ambarella is a leader in the wearable-technology category. And the company’s stock has more than doubled since we first talked about it back in August.

In our talk on Tuesday, we told you that Ambarella had collaborated with Google Inc. (NasdaqGS: GOOG) on a new wearable camera. The device was unveiled at Google, and was well-received (one analyst even described it as an “impressive” piece of technology).

For his part, Shapiro is bullish on the whole sector. He noted the industry is still in its early stages but he saw a paradigm I think every investor needs to understand.

Wearable tech today is “like the first generation of the iPod,” Shapiro told CBS News. “It was bulky and it wasn’t that pretty. Look what happened. It got slimmer. It got better.”

Then again, the technology that makes it all possible – advanced sensors – also keeps getting much smaller.

Devices like gyroscopes and accelerometers that can measure tilt, angle and speed are as little as one-tenth the size of a postage stamp.

But with the exponential increase in technology, they’ll be less than half that size in as little as four years, putting them on the path to having monitors for body or emotional stress sewn right into your clothes.

That’s why Shapiro is far from the only who’s upbeat about wearables…

Research firm IHS says the global market for this tech could top $30 billion in 2018, compared with what it estimates as $10 billion in sales in 2013, meaning it could triple in just five years.

Let’s Dial Up the “Connected Car”

Automakers and parts suppliers call it the “connected car.” And it’s the next big thing in the auto sector.

Today’s new cars and trucks are stuffed with advanced technology that allows them to connect to mobile devices. Thanks to the auto-sector rebound, those connected cars are selling.

The research firm SBD predicts the global value of the connected car industry will nearly triple by 2018 when it will have a value of $30 billion. That compares with $9.8 billion, SBD estimated for 2012.

And that has tech players, mobile-providers and the automakers looking for what’s next.

Indeed, at CES there’s almost no way you could have missed all the displays set up to address this concept. CES 2014 was billed as a new paradigm for automotive tech. Consider that nine carmakers rented a combined 140,000 square feet of floor space. That’s up 25% from the January 2013 trade show.

At this year’s CES, Google Inc. (NasdaqGS: GOOG) touted its recent alliance with Audi. The German automaker is integrating Google’s Android operating system right into the dashboards of several of its newest offerings.

The Google/Audi team wants drivers and passengers to access navigation, apps and music as easily as they operate Android-powered smartphones.

Of course, this year a wide range of auto-tech suppliers also were debuting new products for advanced autos.

One of them is Delphi Automotive PLC (NYSE: DLPH), which used the Las Vegas event to promote its advances in active safety and connectivity.

Delphi specializes in such innovations as adaptive cruise control, lane-departure warning systems and front and rear cameras integrated with collision-avoidance radar.

As much as any company out there, Delphi really understands the power of the connected car.

At CES last year, it unveiled Delphi Connect. It’s a small device that plugs into your dashboard and lets you troubleshoot and monitor your vehicle — from the convenience of your smartphone.

Reorganized as a tech-focused auto supplier, Delphi went public in 2011 at $22 a share and was recently trading at around $60, for a post-IPO gain of 172%.

But the stock still has plenty of upside because of the huge role it plays in the global auto industry.

It sells to more than a dozen major brand names and boasts some 2 million parts numbers; in fact, Delphi ships more than 60 million parts around the world every day.

No wonder Delphi earns a stunning 37% return on stockholders’ equity (ROE), twice the industry average. It also has an operating margin and a return on assets (ROA) of 10%.

And it offers a combination of growth and value. The stock trades at 18 times earnings, a slight discount from the Standard & Poor’s 500 Price/Earnings (P/E) ratio of 19.

Over the past three years, Delphi has grown earnings per share (EPS) by 35%, meaning they could double in less than three years.

And that means Delphi’s stock price could double in just over two.

The Trends Are Our Friends …

Of course, these three news making categories from CES are not the only trends we’re tracking here at Strategic Tech Investor.

But they give you a great sense of some of the big investing opportunities that lie ahead.

Rest assured that we will continue to keep you up to date on the big tech trends we see that can really help you build your net worth.

We’re always on the lookout for the next Ambarella, highly profitable stocks we tell you about before Wall Street discovers them.

With that in mind, I’ll see you again next week …

[Editor’s Note: Most people don’t have the luxury of attending the CES show in Vegas. But that’s okay. Because I’m going to show you the most lucrative techonologies – and teach you step-by-step how to play them – in my brand new Nova X Opportunity Matrix. It’s your exclusive gateway to seven layers of high tech profits. Go here to see each of these layers in action, starting with a radical (and highly controversial) way to turn a small sum into a windfall.]

9 Responses to I Found a Pot of Gold – At the Consumer Electronics Show

  1. Lois Williams says:

    I am a baby needing milk when it comes to INVESTING. Please continue to feed me. I am very interested. Thanks so far.

  2. James Tefft says:

    I am still in the learning stage on how to buy something. Maybe next week I will try to sell something. Then maybe I will try to learn what to buy and when to sell. Jim

  3. TOM SCOTT says:

    I think the recent decline in AMBA is some taking profits. And you are never wrong to take profits, but I have seen what this chip can do & it is amazing. I am holding my shares & if the price drops enough, will add to my holdings.

  4. Randy says:

    I really enjoy your Strategic Tech Investing emails and your suggestions have been very profitable. I am curious however about the recent emails I have received about the bit coin and Keith Fitzgerald’s stock pattern recognition. These two investment strategies seem unrelated to your typical Strategic Tech Investor commentary. How much credibility should we put on these different investment strategies?

  5. Roy says:

    4K televisions have 4 times the number of pixels of current HDTV. The 4K screens have a resolution of 2160 lines of 3840 pixels vs. the 1080 x 1920 of most current TVs. The “4K” moniker comes from the number of pixels per line and not the number of lines.

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