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3 Nanotechnology Stocks to Watch in 2020

When one thinks of technology, one may think of things like televisions. IPhones. Computers. And the internet. One may even be thinking about today’s most innovative technologies like blockchain and artificial intelligence. One may be less inclined to be thinking about matter working on an atomic level. But for those keeping an eye on nanotechnology stocks, atomic level matter is precisely what the tech stock investor has in mind.

Nanoetchnology is a tech innovation conducted at the nanoscale. The nanoscale is between one to 100 nanometers. To think about this in more concrete terms, a nanometer is 1/90,000 the width of a single human hair.

Nanotech could affect the future of industries like…

and more. One interesting feature of nanomaterial is that it begins to take on new properties when reduced to its small size. For example, some materials at that tiny scale become more magnetic than larger amounts.

Another example of this is that some nanomaterials are better able to kill pathogens than larger sized quantities. 

Characteristics like these obviously have large potential for technology and commerce. There are many other uses of nanotechnology as well. 

An image representing nanotechnology stocks which could be a powerful investing vehicle

The State of the Nanotechnology Industry and Nanotech Stocks

According to BCC Research, the global market for nanotechnology was about $2 billion in 2018. It should grow at a compound annual growth rate of 19.24% through 2023.

Much of this growth is expected to come from China and the Asia-Pacific region. This is already one of the largest markets for nanotech and advanced materials.

Zacks data has the nanotechnology industry performing relatively well compared with the broader stock market over the past year. The S&P 500 returned nearly 27% in that period. Whereas nanotech’s return on investment was a slightly higher 28.5%.

That disparity increases over a longer time line. Over the last five years, nanotechnology stocks earned a whopping total return of 128% versus 73% for the S&P. 

On the other hand, one must consider the fact that these returns are based on expected future earnings growth rather than present earnings. Nanotechnology’s profitability will hopefully be the future. But it isn’t quite yet the present. 

Nevertheless, it has a relatively average price-to-earnings (P/E) ratio of 20.52 for the industry. And it has high stock returns over the past five years. So one can surely see the appeal of taking a stake in this sector.

But which individual nanotechnology stocks should you consider? Here are a few we like:

Nanotechnology Stocks to Watch

Taiwan Semiconductor Manufacturing (NYSE: TSM)

Taiwan Semiconductor Manufacturing is one of the top nanotechnology stocks in the business. It has a strong record of success with the tiny tech. This makes its stock a more expensive pure-play investment. 

The firm is the world’s largest dedicated integrated circuit manufacturer.  And its goal is to become one of the world’s leading semiconductor foundries.

The company’s stock has climbed from $36.29 about a year ago to around $55 now. That’s a gain of about 53%. Quarterly net income in December 2019 was reported at $116.04 billion. And that’s a 3.69% year-over-year gain on $317.24 billion revenue.

With lots of cash flow and healthy profit margins, there’s good reason to think that Taiwan Semiconductor Manufacturing has room to continue increasing. So this makes it a good nanotechnology stock to keep watching.

Thermo Fisher Scientific (NYSE: TMO)

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About

Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.

He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.

His primary interests at Investment U include personal finance, debt, tech stocks and more.

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