Robots are for real
Robots have always held a cultural allure for Americans, from Gort in The Day the Earth Stood Still, to the Jetsons’ maid, Rosie, to Star Wars’ C-3PO. Robots today may not conform to the fantastic notions of Hollywood screenwriters. But they are an increasingly important, growing and widespread segment of the workforce.The auto industry remains the largest market for robots. But they can also be found neutralizing land mines for the military, fulfilling orders in warehouses and assisting in surgical procedures in hospitals. Robots are being designed to pick fruits and vegetables. In Japan, where there are 323 robots for every 10,000 human workers, robots are being developed to assist the elderly and the disabled. And a hotel opening in Nagasaki this summer will be partially staffed by robots that will check in guests, carry luggage and clean rooms.
The International Federation of Robotics estimates that 1.3 million to 1.6 million industrial robots are in use. In 2013 (the latest year for which figures are available), nearly 180,000 robots were sold, the most ever in a single year. Spending on robots worldwide is expected to jump from an estimated $27 billion in 2015 to $67 billion by 2025, says the Boston Consulting Group. The surge will be driven by falling prices, improving capabilities and rising demand as global workforce growth begins to decline and wages rise, particularly in China.
Courtesy iRobot
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IRobot also makes bomb-disarming robots for the military. That segment is struggling as U.S. defense spending declines and troops are pulled from harm’s way. But the company’s disciplined research and development in that area are driving innovation in broader product lines focused on three key robotic capabilities: the ability to navigate, perceive the surrounding environment and interact with it. IRobot’s “telepresence” bots—at about $70,000 each, they look like a mobile stand with a screen on top—allow doctors to consult from afar, or business people to meet or manage remotely. After mapping out your office (or factory floor or medical center), the bots can show up automatically for scheduled events or simply enable you to virtually roam distant halls at will, interacting with those you meet.
For the time being, the Roomba accounts for 75% to 80% of iRobot’s profits, says Morningstar analyst Adam Fleck. But as other products gain ground, that percentage is bound to decline. Says Brian Gesuale, an analyst at the Raymond James brokerage, “iRobot’s ambition is to be a robot company, not a vacuum company.”
Making medicine personal
A decade ago, sequencing one human genome cost $10 million and several months’ worth of computing power. Today, the cost is $1,000 and a day of computing, and within a few years, say researchers, the cost of mapping the complete set of a human being’s genetic information will drop to $100 and a few minutes. This genetic intelligence is ushering in an age of personalized medicine, with one-size-fits-all protocols giving way to more customized—and therefore more effective—treatments for cancer and other challenging diseases. President Obama called the practice “precision medicine” in his State of the Union address and earmarked $215 million in the federal budget to help fund its development.The change is evolutionary and revolutionary at the same time. “I try to avoid military analogies, but we’re moving from World War II–era carpet bombing to dropping laser-guided bombs down chimneys,” says Gavin Baker, who tracks transformative technology as the manager of Fidelity OTC Portfolio. For example, each cancer tumor has its own genetic mutations, which change over time. Sequencing and re-sequencing the tumor will reveal which treatments will be most effective at any given point. “Instead of being diagnosed with breast or colon cancer, you’ll be diagnosed as to mutations,” says Baker. Within 20 years, cancer could become a manageable disease instead of a terminal one, he says.
The prime mover in personalized medicine is Illumina (ILMN), which makes gene-sequencing tools and equipment. Illumina claims 70% of the sequencing market, which is growing at a 10% annual rate and is expected to approach $25 billion in revenues by 2020. In addition to mapping human genomes, the company’s equipment is used to sequence viruses (including Ebola), bacteria, plants for the agriculture industry—just about any organism. Oncology and prenatal screening are promising growth areas.
Potential rivals will have a tough time unseating Illumina, but that doesn’t mean the stock is without risk. One serious misstep or failure to keep on the cutting edge of technology could inhibit Illumina’s long-term success, says Morningstar analyst Michael Waterhouse. The stock, which has soared by more than sevenfold since October 2011, is certainly not cheap, trading at 60 times estimated 2015 earnings. But as the number of genomes sequenced grows from the hundreds of thousands to the tens of millions, bulls say, Illumina’s earnings should continue to expand by at least 20% annually over the next few years, driving the share price ever higher.
Athenahealth (ATHN) isn’t a sexy biotech with a potential cure for cancer. The electronic medical records firm started by helping doctors collect fees from insurers, which it does efficiently. But in a basic way, Athena also makes personalized medicine possible, says Elizabeth Jones, a former physician who comanages the Buffalo Discovery Fund. “When I practiced medicine, I would see patients in the ER, and I wouldn’t know what drugs they were on, what their allergies were or if an old EKG existed,” she says. “That’s ridiculous. That information is all there, somewhere.” Even today, most medical practices are isolated islands of patient information. Athena’s cloud-based platform makes it easier for data to travel among providers, giving a more complete picture of patients.
Athena claims some 62,000 providers as customers, representing 62.5 million patients. As it gathers more information into its cloud, “Athena will be able to do predictive analysis at a very high level,” says Fidelity’s Baker. That allows for early intervention or preventive care that can both improve outcomes and cut costs—vital in a medical system that’s transitioning from paying doctors by the visit or the procedure to paying for keeping patients healthy and costs down. Athena’s earnings are likely to be down this year because of acquisition costs, and its stock trades at a stiff premium—124 times estimated 2015 earnings. Is that too much for a company that says it is building the health care Internet? Athena is the purest play on the migration of medical data to the cloud, says Ark Investment’s Wood. “This is a winner-take-most stock.”
By Anne Kates Smith,
Source:http://www.kiplinger.com/article/investing/T052-C008-S002-stocks-to-cash-in-on-world-changing-trends.html
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