Don’t Fear It – Make Money on It Machines taking over our world used to be the stuff of science fiction. It made for entertaining novels and movies, but the idea is a little scarier when it gets closer to becoming reality. One of the new worries of our time is robots and AI taking over – our jobs, our livelihoods, even our very purpose. We saw how real this worry is earlier this month when dockworkers went on strike. Their picket signs said… Machines don’t feed families. Robotic arms now load and unload ship containers and cargo. They don’t get paid, miss shifts, tire out, or complain. Dockworkers fear they will be replaced, and the rest of us wonder who might be next. It may surprise you, but I remember feeling this as a Wall Streeter 15 years ago. I was an old-school guy in the rapidly modernizing world of trading. Hand gestures were replaced by phones, which were replaced by instant chats. Some traders were indeed replaced by algorithms and bots. Fast forward to today, and it’s estimated that 70% of total trading volume is now algorithmic. I’m as much of a data and algorithm guy as anyone. I modernized as well, and I employ sophisticated data retrieval and analysis through my Quantum Edge system. However, I use that as a powerful tool that can accomplish more faster than any human being ever could. But I don’t turn my investing decisions over to machines. Those lucky enough to feel pretty secure in our jobs still wonder about our kids. I had two sons graduate from high school the last two years, and I can tell you that they face difficult higher-education choices that will help shape their future careers. Those careers themselves are also a question mark. Even gigantic machines like 18-wheelers are being taken over by automation and AI. Aurora Innovation (AUR) plans to roll out 20 driverless trucks to haul freight between Dallas and Houston, ultimately expanding to thousands of such trucks in the next three to four years. These trucks rely on laser, radar, and camera sensors. Source: Aurora Innovation Elon Musk just held his much-anticipated robotaxi event for Tesla (TSLA). Waymo, which is owned by Alphabet (GOOGL), has used robotaxis in San Francisco since 2009. Uber Technologies (UBER) robotaxis are coming. We might view these tech advancements as mind-blowingly cool and the way of the future. And that’s true. We might view them with more concern when jobs are at stake, or if we have trouble trusting technology to do the work once handled exclusively by humans and their judgment. That’s also true. I look at it this way. History shows that new occupations and even entire industries appear on the scene as technology marches forward. That’s not to minimize the shadow side of progress, which has also always been there to some extent. We can’t really control what’s coming anyway, but we can choose to be a part of it. That will look different in different industries and jobs, but as investors, we can reap big profits from transformative technology that increasingly drives our world. The best defense is a great offense, right? Profiting from our imminent AI robotic future is the smartest strategy I can think of. Let’s look now at one scenario where AI will enhance our lives – literally – and evaluate a couple of prominent players to see how their stocks rate. Here’s to Our Health Imagine having access to medical professionals that can diagnose you or monitor everything from your vitals to your heart to cancer… without ever leaving home. Or work. Or anywhere else. It’s not constantly communicating with your doctor himself or herself, but it’s all taking place automatically in the background something on your person all day – your watch or cell phone. AI-enhanced remote medical access is the new doc on the block. These devices can now transmit data like blood pressure or blood sugar. My father uses a high-tech insulin pump for his diabetes, basically managing what can be a horrible and disruptive condition through the cloud. It’s no longer sci-fi of the future. It’s here now, and Apple (AAPL) – yes, that Apple – is out in front at the cutting edge. The Apple Watch has been approved as a portable electrocardiogram (ECG) device for years, and it is also approved for detecting atrial fibrillation, which is an irregular heart rhythm. Apple is now expanding the capability of its Watch and looping some of its other devices into healthcare. The Watch just recently was upgraded to deliver sleep apnea notifications, and AirPods Pro 2 can now work with the iPhone or iPad to administer a hearing test, function as a hearing aid, and actively protect hearing. Apple is a legendary company that has made a lot of investors a lot of money through the years – shares are up nearly 4,000% over the last 15 years – and it continues to innovate. But is the stock a good buy right now? Let’s put some of my system’s data retrieval and algorithms to work to find out. In a sense, we’re using our own AI to identify AI investments – the companies with stellar businesses best positioned to make money on this latest revolution. Quantum Edge Ratings on Two Leaders Longtime readers know that as my Quantum Edge system crunches and analyzes mountains of data, it ultimately boils down the “to buy or not to buy” decision to one elegant number. The Quantum Score instantly summarizes 120 data points per stock, 80 algorithms, and 29 factors. A score between 70 and 85 generally puts a stock squarely in the buy zone, and we can further quantify that stock by looking at its technical and fundamental scores that feed into the overall score. AAPL rates good but not great with a 62.1 Quantum Score. That’s shy of our optimum buy zone, which is not an automatic disqualification, but there are higher rates stocks out there. Source: TradeSmith Finance To further refine our analysis, those Fundamental and Technical Scores also in the low 60s are good but not as strong as other stocks. In addition, with AAPL’s already gigantic $3.5 trillion market valuation – the largest in the world – we must ask ourselves how feasible it is to expect a double, triple, or 10-fold jump to $35 trillion in size. It might happen, but it may take a very long time. We can use the same the same Quantum Score to identify other cutting-edge companies in AI and healthcare – and any industry for that matter – that enjoy huge current success and future upside potential. That’s what I did when I recommended one such company to my TradeSmith Investment Report readers earlier this year. Intuitive Surgical (ISRG) is a leader in robotic surgery, best known for its da Vinci surgical system, and we’re up about 29% in a little over seven months. “Doctor” da Vinci may look like a robotic tarantula from a sci-fi flick, but it really is the future of surgery – the “cutting edge” of medical science (sorry). Doctors who use it prefer it to traditional surgery because it’s more precise, less prone to error, minimally invasive, and can operate anytime. The best surgeons in the world can operate on someone else in an entirely different part of the world. Source: TradeSmith Finance No wonder ISRG generates a 75.9 Quantum Score with equally strong fundamentals and technicals. The company boasts phenomenal one- and three-year sales growth, a hefty 25% profit margin, virtually no debt, and strong forecasted sales and earnings. At a price tag of up to $2.5 million and an annual maintenance cost of $190,000, a da Vinci surgical robot isn’t cheap. But you should know that hospitals don’t buy just one – the number of hospitals with 7+ systems has quadrupled since 2017. We can apply the same system to identify companies on the forefront of AI and robotics that already have great and growing businesses. I found several others in the AI medical space, but I can tell you that ISRG remains near the top of the ratings. We can use it in any industry for any sized stock. The idea behind the Quantum Edge system process is to leverage data and computing power to make finding the best stocks to buy easy. This is how I turned my own threatened future into a successful new path. I saw a data-driven, computer-powered quantitative future for stocks and analysis, and I embraced it. I’m glad I did, as the system continues to perform exceptionally well, beating the S&P 500 7-to-1 since 1990. It has helped my own financial well-being and the well-being of many others through the years. A.I. and robotics are here. We may as well embrace them and make money, using some of the very same tools to find the companies poised to benefit the most. As I said, the best defense is a strong offense. The Quantum Edge is the best offense I know. Talk soon, Jason Bodner Editor, Jason Bodner's Power Trends |
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