Nanotech favorites: 'Big' potential in 'small' ideas


A trio of emerging growth advisors see large potential gains from the "smallest" of ideas – nanotechnology. This broad field involves the study and manipulation of matter at an atomic level.

In The Forbes/Wolfe Emerging Tech Report, Josh Wolfe says, "One way for individual investors to gain exposure to nanotech is to invest in publicly traded investment firms making private VC-like investments such as Harris & Harris (NASDAQ: TINY) and Arrowhead Research (NASDAQ: ARWR)."

Wolfe explains, "Arrowhead and Harris & Harris have both grown about 46% annually since 2002 and both market caps are around $250 million. Arrowhead tends to invest in really early stage companies and TINY tends to invest in syndicates of other top venture capital funds."

The advisor continues, "TINY offers a neat way to slip into its private industry deals. I know these guys first hand and the kinds of bets they're making are heavily skewed to the upside. They might lose 100% of any investment on the downside - but they're swinging for 500% or more on the upside."

Wolfe notes that investors might also invest in indexes or ETFs like the PowerShares Lux Nanotech Portfolio (ASE: PXN). He adds, that for full disclosure, that he is an investor and board member of Lux Research, which assisted in the selection of stocks included in this exchange traded fund.

He notes, "A low-cost nanotech ETF also provides diversification and sector representation." He points out that the PowerShares Lux Nanotech Portfolio, has grown at an annualized rate of 10.3% since its inception late 2005.

For those willing to incur the higher risks of selecting an individual stock in the nanotech space, Gregg Early, editor of The Real Nanotech Investor notes, "One of my favorite stocks in this field is Maxwell Technologies (MXWL NASDAQ).

He says, "The Company specializes in a very arcane field, even by nanotech standards. Maxwell is one of the few companies involved in developing ultracapacitors. This new generation of capacitor has the potential to revolutionize motive and stationary power storage and distribution as we know it."

He notes that the company has just recently been awarded a contract by Mercedes Car Group to design and produce ultracapacitors for an advanced engineering hybrid-electric drive train program that increases fuel efficiency and reduce emissions.

Early adds, "Landing a deal with a major innovator like Mercedes is an optimistic sign of things to come." The company's technology is also being used in programs with German wind power companies and, notes Early, has also made great progress with power distribution companies in China."

Overall, the advisor concludes, "Things are just beginning in this unfolding story. This is a good place to buy the stock."

Ian Wyatt, editor of Rising Star Stocks, also offers a pick among individual nanotech firm. He notes, "Nanophase Technologies (NASDAQ: NANX) is an industry leader in nanotech materials, offering an affordable high growth opportunity in an emerging market."

The company's technology is based on nanoparticles, which Wyatt notes, have unique properties due to their very small size.

Importantly, according to the advisor, Nanophase already has large and established partners including BASF, Rohm & Haas Electronic Materials, Altana Chemie (also a distributor) and Alfa Aesar. Says Wyatt, "Each is a leader in its respective field, with recognized, global brands.

The advisor observes, "Nanophase has realized its tenth consecutive quarter of revenue growth. For the second quarter ending June 30, 2007, total revenue increased to $4.1 million, up 73%."

The advisor has a Buy rating on the stock and a price target of $8, which he notes represents 8 times the enterprise value to forward year consensus sales estimate.

Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.

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Last updated: June 19, 2013: 06:58 AM

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