For much of the 20th century, the largest, most profitable, and most respected companies operated in industries like food production, oil and gas, automobiles, steelmaking, chemicals, brick-and-mortar retail and manufacturing.
Then, an innovation called the internet came along and changed everything.
The digital, service-based firms that embraced this game-changing technology quickly took over large parts of the economy. As their dominance grew, they dethroned “old school” companies that were slow to catch on.
Over time, many of these internet-based upstarts introduced new products and services that became integral parts of our daily lives. Not only did these innovative companies become household names, but their values exploded to be worth millions… then hundreds of billions of dollars… and then trillions of dollars.
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Today, the “Big Five” tech companies are worth more than $1 trillion each: Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). Within this elite group, Apple and Microsoft are worth more than $2 trillion apiece! Not surprisingly, these companies have created some of the wealthiest people in America.
At the heart of many of these extraordinary success stories is the phenomenon of hyper-scalability.
To Scale New Profits
Many businesses are scalable; very few are “hyper-scalable.” Hyper-scalability is the capacity of a business to grow revenues at a much greater rate than the costs associated with producing those revenues.
For example, a lawn-mowing business is merely scalable. If you own a lawn-mowing business and want to double in size, you’ll have to buy twice as many lawn mowers as you have now, and you’ll have to hire twice as many lawn-mower operators as you have now.
Because of this, your revenue cannot soar far beyond your costs.
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On the other end of the spectrum, however, you have social media businesses like Facebook and Twitter (NYSE:TWTR); these businesses are hyper-scalable. It took a lot of work in the early days to create the technologies and businesses behind them.
But once they were created, these two businesses could add new users and increase their advertising revenues much faster than they increased costs.
Their market values exploded higher as a result, and they grew to mammoth sizes at blistering paces. One textbook example would be Square (NYSE:SQ). From its humble public beginnings in 2015, this financial-payments company’s stock has soared an unbelievable 2,800%.
Another familiar example would be Netflix (NASDAQ:NFLX). The groundbreaking video-streaming company that Blockbuster infamously declined to purchase for $50 million is now worth $230 billion. Its stock has rocketed more than 5,000% during the last 10 years.
These two companies will certainly continue to thrive.
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But when it comes to hyper-scalability, the sector that may have the greatest growth potential over the next few years is 5G technology.
Now, 5G might sound like old news, but that’s far from the truth.
Based on recent estimates from industry sources, 5G networks will generate a whopping $56 trillion in global sales activity by 2050. For example, 5G-enabled…
- Artificial intelligence is on pace to unlock over $30 trillion in new revenue.
- Internet of Things is going to add $19 trillion to the economy.
- Driverless cars are predicted to add $7 trillion.
Bottom line, 5G is the next incoming tech innovation (just like the internet in the 1990s…).
At the helm of this movement is a fascinating, under-the-radar 5G play.
Despite its small size ($324 million market cap, as of mid-July 2021), the company has carved out an industry-leading position in a couple of rapidly growing markets.
It generates its revenues from a diverse suite of products that serve multiple industries. But the company has been focusing increasingly on two core competencies: sensors and fiber-optic testing.
Both of these markets offer exceptionally large and long-lived growth potential.
To boot, the company’s rapid growth — and potential to accelerate that growth — could easily propel the stock to an even higher valuation.
What’s more, thanks to their unique capabilities, many companies could consider this company to be a compelling takeover prospect.
I show you how to get the details on this company — and more 5G plays like it — in my recent Tech Supercycle Summit.
Regards,
Eric Fry
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NOTE: On the date of publication, Eric Fry did not own either directly or indirectly any positions in the securities mentioned in this article.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.
