Apple Inc. (Nasdaq: AAPL) is generating a lot of headlines today.
That’s because the company unveiled three new iPhone and upgraded Watches and TVs during an event at the new Steve Jobs Theater on Apple’s Silicon Valley campus. The company is hoping that its new devices will help it reverse six straight quarters of sales declines in China.
That’s big news – for Apple and its shareholders… for iPhone suppliers and their shareholders… for Apple’s competitors and their shareholders… and for the “tech news industrial complex” that depends on Apple for clicks and page views.
But also scheduled for today is another announcement that I think is a much bigger deal. And for reasons I can’t comprehend, not many folks are talking about it.
You see, this big announcement won’t affect just companies and their shareholders – its ramifications could change how we all live and work in the very near future.
Today I’ll tell you about that announcement.
And I’ll also show you the best way to profit from it for years – decades – to come.
This investment has already gained 6.6% since we last chatted about it back in June. By contrast, the S&P 500 has gained a modest 1.1%.
That means you’re already beating the market by 500% with this one.
But now – above and beyond today’s announcement – I’ve spotted another $300 million new catalyst that tells me this tech winner is just getting started.
Now, let’s get started ourselves…
Live… From Michigan
This is Washington’s second try on this. However, the auto and tech industries hated the Obama administration’s heavy-handed, regulation-filled attempt back in September.
Chao’s guidelines are much less burdensome – and, better yet, voluntary.
Plus, Chao has some backup – from Congress.
Last week, the U.S. House of Representatives unanimously approved a measure that would make it easier to find uses for autonomous vehicles.
Already, the Boston Consulting Group (BCG) forecasts 12 million fully autonomous vehicles leaving factories each year by 2035, with an even larger figure of partially autonomous vehicles doing the same. In dollar terms, we’re talking about a $42 billion market by 2025… and $77 billion by 2035. And according to ResearchandMarkets, the number of new driverless cars registered each year will grow from about 200,000 in 2020 to 24 million in 2030. By the end of 2030, there could be 71 million driverless cars in service around the world.
That’s the future.
But driverless vehicles are making a big impact right now.
Let me show you what I mean – by discussing that $300 million new catalyst I mentioned before…
Yes, That John Deere
I understand why many investors think of Deere & Co. (NYSE: DE) as old school.
The world-famous tractor firm that got its start way back in 1837 when founder John Deere developed a rudimentary plow from a broken saw blade.
Today, the global leader makes all manner of heavy equipment used in agriculture, construction, landscaping, and even defense.
And yet, Deere has become a cutting-edge tech leader.
And a driverless vehicle leader.
In fact, it’s spent the past 20 years developing truly autonomous tractor. We’re not just talking about GPS-based steering. Deere’s S700 combine, for example, automatically adjusts its harvesting equipment based on the condition of the crop it sees
Last week, Deere moved deeper into advanced tech with a $300 million buyout of Blue River Technology. Deere aims to deploy Blue River’s artificial intelligence technology to automatically identify weeds and then spray them with a dose of herbicide. That means farmers can now save money by spraying only those crops that need it and by delivering the correct amount.
Blue River’s other advanced systems include a device that trims lettuce in the field and software with which drones analyze crops.
All of this should help Deere remain at the forefront of what’s known as precision agriculture.
In fact, automation – including autonomous tech – is sweeping the agribusiness sector.
Predictive algorithms help crop-yield monitors supply detailed information about production data right at the harvest. Sensors and soil-sampling devices gather data on soil moisture and nutrient levels.
And a range of mobile apps and unmanned aerial vehicles (drones) help assess crop health and monitor pest and disease conditions during the season.
More efficient farming is bringing a clear payoff for consumers. After steadily rising earlier in this decade, food-price inflation has simply disappeared over the past two years, according to the St. Louis Fed.
More to the point, AI, robotics, and driverless technology are extending well beyond the farm to impact virtually the entire world around us.
From Silicon Valley and Detroit to e-commerce and petrochemicals to facial recognition and biotech, we’re seeing massive investments in AI-powered robotic systems.
And many firms beyond Deere are using M&A as a path to enhance automation. CB Insights says that buyouts of AI firms have soared from $559 million in 2012 to a recent $4.87 billion, a roughly eightfold increase.
And that flurry of deal-making is taking place ahead of a big spike in AI and robotics deployments. Grand View Research sees spending on such systems rising at a 57% yearly clip through 2025, by which time we’ll be talking about a $58.9 billion market.
How to Play the Trend
When we talked back on June 23, we uncovered a great way to play the growth field of robotics.
I noted that this field is much broader than it sounds – that it contains key elements of the Convergence Economy, including drones, machine vision and learning, semiconductors and sensors, and, of course, AI.
At the time, I predicted that the Robo-Stox Global Robotics & Automation ETF (Nasdaq: ROBO) could double the market’s return.
That may have sounded overly ambitious to you. The truth is… that prediction was conservative.
This terrific ETF has gained 6.6% since that briefing. The S&P 500? It’s ticked up a modest 1.1%.
That means we beat the market by 500%.
Clearly, based on its track record and its robust portfolio, the ROBO is a great way to play the long-term trend in autonomous vehicles, AI-powered robotics, and automation.
Besides counting Deere as a major holding, the fund has 82 more stocks in its lineup. It covers just about every angle. We’re talking everything from 3D printing and chips to drones and massive industrial robots.
The 0.95% expense ratio is higher than I generally like to pay (check out my ETF metrics here). But let’s make an exception here. This fund is especially well-built to capture the field’s sizzling growth
ROBO owns the world’s top automation and robotics firms.
Take a look…
Four Robotic Pioneers
- Daifuku Co. Ltd. (OTC: DAIUF) – This Japanese company builds custom automated factory solutions for clients in e-commerce, food, chemicals, and general industry. Profits have risen at a 23% yearly clip since 2014, and management’s current growth strategy should start to target new markets such as airports that are just now adopting a high use of automation.
- Rockwell Automation Inc. (NYSE: ROK) – From its home base in Milwaukee, Rockwell provides an advanced set of software, hardware, and sensors that are helping dozens of industries to work smarter. One example: the firm’s manufacturing execution system (MES) enables steelmakers to precisely monitor every aspect of the production process. The firm is also rolling out its new Rockwell Automation Integrated Architecture system, which lets clients control and collect data from a wide variety of devices over a single network.
- Aerovironment (Nasdaq: AVAV) – This company is best known for its work with the U.S. military, where it ranks as the top drone supplier to the Pentagon. Aerovironment’s Raven is the most widely used unmanned aircraft system in the world today, in no small measure because soldiers can launch it simply by throwing it into the air. The Raven also can be operated automatically using drone-centric avionics and precise GPS.
- Cognex (Nasdaq: CGNX) – This world leader in machine vision supplies software, vision sensors, and industrial ID readers used in manufacturing automation. These systems are used for guiding assembly robots but also for tracking, sorting, and identifying products. Cognex is a key supplier to Apple for its vision systems that can detect product defects, a key part of quality control. It also makes logistics barcode readers and tracking software.
A Very Bright Future
ROBO launched in late November 2013. To mark the occasion, Nasdaq officials used a robotic arm to ring the closing bell.
Priced at around $38, Wall Street waking up to the value that a balanced play like ROBO represents.
The fund has $1.1 billion in assets, which is quite impressive when you consider it was launched less than four years ago.
Frankly, this young ETF is just getting started. The firms in its portfolio are making heavy investments now to prepare for a driverless- and robotics-led future.
As firms like Deere start to make ever larger investments in autonomous and other advanced tech, it’s clear that the we’re on the cusp of a new – and very profitable – era.
In other words, I’ll be watching not one but two big announcements very closely today.
You should do the same.
Have a great week.
See you back here soon.