TheStreet.com on Investing in RFID
Investor site TheStreet.com published an article yesterday about investing in RFID stocks. While the key takeaway is the same as ever -- there are currently no obvious publicly-traded stocks to use as an RFID investment vehicle -- the article offers a handful of points worth highlighting.
Oct 25, 2007
—This article was originally published by RFID Update.
October 25, 2007—Investor site TheStreet.com published an article yesterday entitled What Do I Need to Know About RFID Stocks? While the key takeaway is the same as ever -- there are currently no obvious publicly-traded stocks to use as an RFID investment vehicle -- the article offers a handful of points worth highlighting.
- In general, RFID is likely to benefit from post-911 security consciousness. In particular, it will see demand as an enabler of electronic security documents, like e-passports. "It goes without saying that defense and security run pretty high on the national agenda, and with its implementation in U.S. passports, [RFID] is poised to prove itself on one of the most public security battlegrounds out there -- the nation's borders."
- Public companies that get a mention for their RFID businesses include Applied Digital, Digital Angel, Zebra Technologies, Intermec, VeriChip, and Axcess International. (Note that Applied Digital and Digital Angel have merged, the former acquiring the outstanding shares of the latter; see VeriChip Parent Buys Out Animal Chipping Subsidiary.)
- None of those stocks have done particularly well this year, with the exception of OTC-traded Axcess International, which is up 40 percent since January. Note that this does not necessarily mean Axcess International is a sure thing. For one thing, it is a penny stock, which could mean it carries more risk. "Another thing to think about is the fact that many of the pure RFID stocks out there are penny stocks which can add another element of risk to investing in this industry."
- The RFID industry is relatively small, which makes the players' fortunes more vulnerable than they might be in a more established industry. "The RFID industry is still small enough that volatility is a big factor. Until RFID becomes more widely adopted, that's not likely to change. It's on its way, but it's not there yet."
- Even for those with a big enough tolerance for risk to invest in penny stocks, TheStreet.com warns that such small companies will be increasingly challenged in the marketplace by powerful technology giants that until recently have been waiting on the sidelines. Giants like Intel, Microsoft, and HP, all three of which have been made headlines in 2007 with their respective RFID efforts. "The next few years should be equally interesting as big tech companies enhance their RFID presence. Smaller ones will have to either adapt or get out. Personally, I don't think that the majority of the risk here involves whether or not RFID will ultimately be adopted more widely, it's more a question of whether or not the current niche players in the industry (or the ones yet to emerge) will make it through this rough spot."