Given the expanding size of the nanotechnology industry, buying nanotechnology stocks with a very low-risk profile is possible.
Electronics is one of the most important sectors that applies nanotechnology. Technologies like nanoscale semiconductors and nanorobots are improving the efficiency and size of electronic elements. This sector is expanding further due to the emergence of nanotechnology, which enhances the creation of better and more effective electronic gadgets.
Current nanotechnology market estimates indicate North America holds the largest share due to high research and development investments and the geographical location of numerous technological centers. At the same time, the Asia-Pacific region is forecast to grow at the fastest pace. This is owing to investments in the energy and manufacturing industries. China, India and Japan are the key players in producing large-scale nanomaterials in this region.
Here are three of the best nanotechnology stocks with the best risk profiles.
Thermo Fisher Scientific (TMO)
As an investor, I like Thermo Fisher Scientific (NYSE:TMO) for its low-risk approach to nanotechnology.
The latest acquisition of Olink by TMO improves the company’s proteomics solutions, especially in mass spectrometry. Also, the company’s collaboration with Bayer AG to develop next-generation sequencing is evidence of its continued innovation.
China is another region that will benefit from TMO due to the country’s stimulus program for capital equipment. TMO’s strengths, operational diversity and product development make it a low-risk investment in the Nanotech sector.
Meanwhile, I think that TMO is also low risk from a valuation perspective. Its projected forward earnings of 25x are substantially lower than its trailing earnings of 36x. Analysts, therefore, see great potential in the company to continue growing its bottom line, and I expect this trend to continue into the future. This makes TMO one of those nanotechnology stocks to consider.
Veeco Instruments (VECO)
For a relatively low-risk investment in nanotechnology, I like Veeco Instruments (NASDAQ:VECO). The company has concentrated on advanced semiconductor process equipment and thus enjoys a vanguard position in nanoscale manufacturing. This shows in its ability to generate revenue and earnings growth during periods of cyclical industry decline.
What stands out is that Veeco is the market leader in many aspects, including laser spike annealing, where they have more than 70 percent market share. Their entry into new and developing markets like nanosecond annealing and ion beam deposition for low-resistance metals puts them in a very strategic place for the future of the next generation of chip production.
Despite being tethered to the volatile semiconductor industry, VECO has shown some resilience that may reduce its risk profile. The company’s balance sheet is one of its greatest strengths, with current and quick ratios of 3 and 1.7, respectively. It also has a relatively low beta for a cyclical stock, 1.22, which it has maintained over the last five years.
DuPont de Nemours (DD)
DuPont de Nemours (NYSE:DD) is heavily invested in nanotechnology across various sectors.
The company’s specialty in advanced materials and chemicals, especially in its Electronics & Industrial business line, places it strategically in the nanotech field.
I want to point at DuPont’s ability to recover and transform its business in the face of challenges as the most inspiring aspect. Still, the company has continued to pay a dividend and has even enhanced free cash flow despite the current hardships faced by a declining Chinese economy.
Furthermore, I welcome the change in DuPont’s strategy. The company will be divided into three separate entities. This could open up quite a bit of value by forming more focused, nimble businesses that can take advantage of market opportunities. The company has a good balance sheet and stable cash flow, which will support this transition.
With around 24,000 employees, DD stock will be split into smaller units to reduce its execution and business risks. This transition will gradually unlock value for shareholders over time.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
