You don’t need to invest a lot of money to have amazing returns in the stock market. If you invested $3,000 in Amazon (NASDAQ:AMZN) 20 years ago, you could have bought 300 shares. At a Jan. 29 price of $3,203 per share, your $3,000 investment would now be worth $960,900. To pull off an investment like that, you had to be willing to take risks (Amazon was unprofitable in its early years), practice patience, and let the growth story play out.
Are there any stocks in 2021 with Amazon-sized futures? Yes, there are. A few that come to mind are small companies using nanotechnology to disrupt the healthcare and manufacturing industries. Nano-X (NASDAQ:NNOX) has a device that could make X-rays a lot cheaper and more accesible. And Nano Dimension (NASDAQ:NNDM) uses nanotechnology (and 3-D printing) to revolutionize the way companies manufacture electronic circuit boards. Read more to find out why these stocks might be wonderful for patient, risk-tolerant investors.
1. Smaller is better for Nano-X
Nanotechnology led to the breakthrough.
The problem with high-end X-ray machines like those using magnetic resonance imaging (MRI) or computerized axial tomography (CAT) is that the machines are massive and cost hospitals over $1 million, and in some cases as much as $3 million. These high-end medical X-ray systems have to generate a tremendous amount of heat for the X-ray to happen — up to 2,000 degrees Celsius (3,600 degrees Fahrenheit). Using micro-electrical-mechanical-systems (MEMS), Nano-X was able to fabricate millions of nanoscale gates on a silicon chip. Each one of these microscopic “nano-spindts” digitally creates and controls the electrons that power an X-ray device.
The result is that we no longer need to generate heat for an X-ray to work. Instead of having to power up to 3,600 degrees Fahrenheit — and then cool down — the Nano-X device stays at room temperature. Thus the company was able to build a much smaller, and cheaper, X-ray machine. And yes, the engineers who designed the sleek machine were inspired by Star Trek.
Nano-X says the device — once it’s cleared by the U.S. Food and Drug Administration (FDA) — will cost about $10,000 to manufacture. But what’s exciting the market is not how cheap the device is, or even how popular it might be. What’s truly getting investors jazzed is that Nano-X will take a small percentage of the fee every time its X-ray device is used. That’s the classic razor-and-blades pricing model that helped make Intuitive Surgical (NASDAQ:ISRG) investors rich. Nano-X can actually give its machine away, because it’s making money on the use of the device, not on the original sale.
Will the device work as well as the MRI and CAT scans common in hospitals today? Skeptics abound. The company has no profits (or even revenues) yet. Shorts and other traders have made Nano-X’s stock price incredibly volatile. But early investors who took the plunge upon its IPO in August are doing quite well so far.
2. Using Nanotech to transform 3D printing
3D printing has been around for decades. It’s now become fairly commonplace in many industries. For instance, SmileDirectClub (NASDAQ:SDC) uses 3D printers to create aligners for your teeth. Nonetheless, this revolution in manufacturing is just beginning. And Nano Dimension might just be the most important company in 3D manufacturing today.
Nano Dimension uses nanoparticles to transform the inks used in 3D printing. Its Dragonfly device allows designers and engineers to print functional circuit boards and other electronic devices.
This is huge, for any number of reasons. Research and design labs can keep their intellectual property secret, because they can manufacture in-house cheaply, quickly, and easily. But 3D printing has an added benefit — you can print devices with parts that are so tiny, they were impossible to manufacture before. As the company puts it on its website, designers can “pack more functionality in smaller footprints.”
Nano Dimension has customers in aerospace and defense industries, but also in healthcare. Medical device companies can now 3D print noninvasive sensors and micro devices.
The most enticing thing about Nano Dimension for investors is its business model. The company has sold only 60 devices so far. But, as with Nano-X and Intuitive Surgical, the real money will be made in service revenues. Nano Dimension will make its money by supplying the miraculous inks that allow these systems to work. The more companies use its device to print circuit boards, the more money Nano Dimension will make.
This recurring revenue model is a wonderful business to invest in. While these small and unprofitable companies are certainly risky — and highly volatile in the short term — patient investors with a long-term outlook can easily make a fortune if either company pulls it off. That’s the key to investing in early-stage companies — don’t put all your eggs in one basket. And hold on to your shares to see how it all unfolds. Patient investors who understand the risks might just see some amazing returns down the road.