Before diving into nanotech stocks to watch it’s important to consider what “nano” is and what it promises. Nano means billionth. Micro, which we are more familiar with, means millionth. Thus, nanotech exists on a scale 1,000 times smaller than the scale on which microtechnology does. Because of this, companies that compete in nanotechnology represent revolutionary advancements.
It’s also important to understand how truly small nanoscale measurements are. The nanoscale is down to the atomic and molecular level. And not to get overly technical, but the nanoscale is truly different. Science as you and I know it, is different on the nanoscale. Physical and chemical properties change.
This is part of the reason why nanotech stocks are interesting.
The science of nanotech allows advancements in ways that are currently unfathomable. The rules change. Atoms and molecules operate differently than they would on the microscopic level. And it’s because of this that technology opens up new horizons.
It is also worth noting that nanotechnology has its detractors. Some claim that because the science is completely new, we may be unprepared. The argument is that because we don’t fully understand the physical and chemical interactions that nanotechnology allows, we should not proceed.
I for one believe humans have nothing to fear.
The applications of nanotechnology are many. Many already exist today, and many others will exist decades from now. Nanotech is already being actively used in the computers, microchips, chemicals and devices we use each day. The future holds the promise of applications including nanobots, nanomedicine and chemicals with unique properties.
All that said, let’s look at five stocks which will lead this nanotech innovation.
- Applied Materials (NASDAQ:AMAT)
- CMC Materials (NASDAQ:CCMP)
- Taiwan Semiconductor (NYSE:TSM)
- Thermo Fisher Scientific (NYSE:TMO)
- DuPont (NYSE:DD)
Nanotech Stocks: Applied Materials (AMAT)
Applied Materials makes engineered materials for chips and displays. The company is heavily involved in the microchip industry. Microchip competition is itself heavily driven by the ability to reduce sizes and apply films on an atom-by-atom basis.
A recent development from the company in nanotechnology highlights how it will lead innovation in semiconductors. The breakthrough is called selective tungsten deposition.
Essentially, Applied Materials has developed this process to give chipmakers a new way to build transistor contacts. It helps them eliminate the liner-barrier and nucleation layers — allowing greater transistor density, decreasing resistance and increasing performance. Taking away the jargon, the company says it is like 3D printing at the atomic scale.
My opinion is that Applied Materials will be a nanotech stock to watch for years to come.
From a financial and overall stock perspective, analysts favor AMAT stock as a buy.
CMC Materials (CCMP)
CMC Materials is a pioneer in the chemical mechanical planarization field. Essentially, this means that it uses slurries — mixtures of fine particles like cement suspended in water — to smooth the surface of materials through chemical and mechanical forces. Why does this matter? Well, the semiconductor industry widely uses these slurries.
As the semiconductor industry continues to require ever increasing precision on the nanoscale, CMC Materials will be there.
Analysts are not particularly enthusiastic about CCMP stock — rating it as a hold. However it does provide a dividend of 44 cents. While it may or may not be a stock which appreciates, it does again have a dividend which has been continuously increasing since 2016. And whether investors choose to buy or not, the company will remain a nanotechnology pioneer in its niche within the semiconductor industry.
Nanotech Stocks: Taiwan Semiconductor (TSM)
Taiwan Semiconductor is a company to watch for both nanotechnology innovation and gains.
TSM was the first foundry to manufacture 7-nanometer chip production in scale volumes. That gives the company an edge when it comes securing a foothold in emerging sectors like 5G, artificial intelligence and cloud computing. The company has risen significantly in 2020 but it is still overwhelmingly rated a buy.
Taiwan Semiconductor announced back in May that it was going to spend $12 billion to build a semiconductor manufacturing plant in Arizona. The plant will be operational in 2024 and produce 5-nanometer semiconductors. TSM began 5-nanometer semiconductor production in Taiwan early this year.
Taiwan Semiconductor has shown that it is the leading foundry in terms of iterating semiconductors on a smaller and smaller scale. This is a major factor in semiconductor success. Thus, it is clear that along with U.S. national security considerations TSM stock can benefit from simply being an innovation leader.
Thermo Fisher Scientific (TMO)
Thermo Fisher Scientific is a company to keep an eye on for innovation in the electron microscopy field. What is that? Electron microscopes allow image creation down to the level of the individual atom. Thus, electron microscopy allows us to view worlds we simply couldn’t previously. This allows exciting developments to occur across life sciences, materials, semiconductors and other industries. The applications and potential for paradigm-changing developments are many.
One example of Thermo Fisher’s nanotechnology application is in electrical failure analysis of semiconductors. The companies website explains why its imaging technology is increasingly relevant industrially:
“Shrinking technologies, new materials, and more complex structures are driving defectivity, especially where the circuit design is particularly sensitive to process variation. These non-visual defects reveal themselves as electrical faults that downgrade device performance, threaten reliability, and destroy yield. The problem becomes even more complex when failures occur at the device packaging stage. High-density interconnects, wafer-level stacking, flexible electronics, and integral substrates mean that failure-inducing defects have more places to hide — making characterization more difficult, and more critical, than ever.”
From a financial perspective, TMO stock is strong. Fifteen analysts rate it a buy while only three recommend it as a hold. The company is a giant in scientific equipment, and is an interesting one to follow for innovation alone.
Nanotech Stocks: DuPont de Nemours (DD)
DuPont is a materials leader, operating across many industries and niches. The company is famous for being the creator of Kevlar. What is that? Kevlar is an aramid, which is a word meaning aromatic polyamides.
Importantly, Kevlar has big potential. According to the company, it improves performance, strength and protection. It is perhaps most famous for some of its uses in personal defense — as Dupont says it is stronger than steel, it is used in ballistic body armor. Thanks to the nanotechnology behind the material, there is just so much for investors to appreciate.
DuPont also has several other materials which it has developed for commercialization based on nanotech. The company is absolutely a leader in this space.
In addition to Kevlar, the company also manufactures Tyvek and Nomex. Investors interested in nanotech should really consider simply browsing DuPont’s website to gain an understanding of its products and their potential.
There are a few encouraging signs making DuPont an equity to consider buying. Analysts strongly rate DuPont as a buy with 18 giving it a buy rating and only four rating it a hold. Another strong positive is that insider purchases favor DD stock as a buy. In the last three months there were four insider purchases, which lends credibility to the idea that company can succeed and the stock can appreciate.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.