It’s no secret that technology continues to change just about everything. Two major themes that have been growing the past few years are automation/robotics and the Internet of Things (IoT). It all has to do with integrating everything with technology – the connectivity – to control, track, store and analyze data. This makes things more efficient and can do everything from saving time, money and lives. Things like wearables, autonomous driving, etc. I see these as two of the best long-term investment themes in today’s market.
I’ve targeted a few companies on forefront of this change but have only purchased stock in one of them so far. I have the rest on the shopping list for the next big dip in the stock market.
The company I’ve been buying over the last few weeks is called Flextronics (FLEX). They’re a global manufacturer of the physical pieces that make up the “stuff” we buy. They work with companies on the design, manufacturing and assembly, and have been upgrading their production capabilities with the onset of automated manufacturing. As part of the design process though, they also help companies understand and integrate their new products with IoT.
I view Flextronics more as a middleman in the process rather than a direct producer of automated equipment. But I like them on the basis that people love to buy “stuff.” And as the speed of technology increases the rate at which our stuff is outdated, we’re buying “new stuff” more often.
Flextronics is a company that makes a lot of this stuff. They works with just about every industry and have been focusing on expanding their business in higher margin areas like automotive and healthcare products. They’re also a big supplier of parts for the electronics industry – everything from smart phones, tablets, laptops, etc. For example, they produce Chromecast for Google.
You can view an interview with their Chairman of the Board from a few weeks ago discussing IoT. And you can read about how these new technologies are changing the world at a webpage Flextronics created.
Lastly, and most important from an investment perspective, the reason I started buying Flextronics is the company’s capital allocation policy. Gotta love companies that understand how to make their shareholders money.
Thanks for following and enjoy March Madness – I know I always do!
-Nick
IoT has a lot of potential for changing industry. It will be interesting to see which, if any, of the big name building automation companies adapt to the residential and consumer grade automation. Google purchasing Nest gave them an entry into the market but companies like Honeywell, Siemens and Schneider Electric have been automating on the commercial scale for decades. If they can create products that are simple enough for Joe Homeowner to install himself they could spur some cool advances in the market.