Most investors playing a tech trend tend to look for the companies that most directly play to that trend. For tech stocks, that may mean owning chip companies or software companies.
However, a powerful trend can impact multiple industries. And investing in industries implementing new technologies before they see a benefit can lead to great returns. The trick is to look at the adoption of these disruptive technologies when the market is still focused elsewhere.
For instance, self-driving cars are still a concept largely on the drawing board. While that sounds like something out of Silicon Valley, self-driving vehicles are starting to improve the bottom line of companies globally.
Tyson Foods (TSN) has started using self-driving trucks. That’s a real-world application of self-driving technology, combining artificial intelligence (AI) software with other hardware.
But it will also lower the cost of shipping, and reduce the time to ship, as self-driving trucks don’t need to stop for rest breaks.
That could help Tyson reverse some of its losses over the past year.
Action to take: Tyson trades at about 17 times earnings, a slight discount to the overall market right now. Investors can likely see a rally ahead as the company improves its profitability. Plus, at current prices, shares yield about 3.7 percent.
For traders, the January $55 calls, last going for about $1.85, could see mid-to-high double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
