You are taking part in a revolution.
If you pay to drive through a toll booth, or you travel abroad, or
in some cases use your credit card, you're a willing participant.
But this handful of actions is just a sliver of what's to come.
In fact, it's just a tiny fraction of what's already taken place.
Everything from manufacturing, to retail, to energy production has
felt the impact of this revolution. Despite the broad application
this technology has already seen, however, there's no doubt we're
still in the early innings.
And if you're an investor like me who is always looking for
game-changing ideas, I think I've found one. It's RFID.
RFID is an acronym for radio frequency identification. The
technology comes in the form of tags that emit a radio signal as
they pass a scanner. This signal is pretty much the same as a bar
code -- a long number that can provide a ton of information. But
unlike bar codes, you don't have to scan each one individually with
a laser; you can use a radio receiver, which makes it much easier
to scan items that are densely packed or are moving quickly.
And while the technology has been in use behind-the-scenes, it is
just now moving into our daily lives. RFID tags are used in your
E-ZPass -- the device tollbooth scanners read as you drive by and
"magically" charge you. Some credit cards have RFID tags, allowing
users to simply wave their card across a reader, instead of handing
a card to a cashier, swiping it through the scanner, and then
signing a receipt. And all newly issued passports contain an RFID
chip that is used to cross-check the information printed in the
passport for improved security.
Hundreds of practical, profitable applications
But I don't classify a few million chips put into passports or toll
tags as a game-changer. No, the real opportunity is with this
technology's application for industry.
RFID is fascinating from an industrial standpoint. In short, the
product helps improve efficiency. That might not sound like the
sexiest goal on the planet, but there isn't a business manager in
the world that wouldn't gladly spend cold hard cash if it means
saving tons of money down the line. And that's exactly what's
happening in all sorts of places. Take a look for yourself at how
expansive the usage of RFID truly is...
: It used to take seven workers to transfer, unload, and manually
enter the shipping/receiving data for parts and material shipments
plant in Washington. It took two hours a day per employee to read
and record all the bar codes from each shipment. And there was
noguarantee of accuracy.
Enter RFID. Boeing put RFID tags on these goods. The tags are
automatically read by a scanner on the door frame, the data is sent
to the warehouse management systems, which automatically generate a
to the supplier when goods are received. Now Boeing needs one
worker, the system is perfectly accurate, and the savings in labor
costs alone paid for the hardware investment in just six months.
: The Texas Tech University Health Sciences Center has tons of
state-of-the-art equipment for its students and faculty. A lot of
them, of course, are small, and the school needed a way to keep
tabs on everything.
Bar codes were onerous to use and ultimately proved error-prone and
ineffective. But installing RFID scanners and tagging the equipment
could create a real-time picture of what devices were where. This
application has hundreds of other uses, from law firm files to
inventory control on car lots.
: Airline passenger volume is projected to hit four billion people
by 2019, which will, at current levels of loss, generate nearly 70
million lost bags a year.
Fun fact: Each lost bag costs the airline about $130. That means in
just the span of a few years lost baggage will be a $9.1 billion
problem each year.
Fitting bags with RFID tags is a simple solution to a complex
problem. The tags can be read at dozens of points throughout the
underbelly of an airport as they move from point to point, ensuring
that they are routed and loaded correctly. The more bags loaded
quickly and correctly, the better an airline's on-time performance
and customer satisfaction. That's dollars and cents -- billions of
them -- that can be bought back and added to the carrier's
with a relatively modest RFID investment.
: Beginning with jeans,
is testing the technology, which can help a customer see if the
jeans they want are in stock and literally where they are. The
company could add this capability to thousands of products in its
Action to Take -->
When it affects this many areas (and believe me, this is just a
taste), it's not a question of if RFID will catch on, but which
stocks are going to profit the most from the revolution.
There are a number of options in the space, and to be honest, I'm
still researching the field to pin down my favorite. But if you
want to start your own search, you might start with a company
Zebra Technologies (Nasdaq: ZBRA)
The shares have been on a tear recently -- they're up +49% since
July. I'm keeping an eye on them and doing some further hunting
elsewhere as well.
Andy spent a decade as a financial journalist writing for some
of the largest newspapers in the nation. His acumen helped guide
the financial news read by over a million people each day. Read
P.S. -- There's no doubt RFID is a game-changing idea. But when
you really start digging, as I do on a daily basis, you find there
are enough game-changing opportunities to make you a millionaire
several times over. With that in mind, I recently put together some
of my favorites in a special report called The Hottest Investment
Opportunities for 2011. Click here for details on this report.
Disclosure: Neither Andy Obermueller nor StreetAuthority, LLC
hold positions in any securities mentioned in this article.
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