Japan to See Flying Cars in a Decade: 3 Stocks to Watch

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Three-dimensional transportation networks could be a reality with flying cars hovering over Tokyo in a decade, as the world's biggest innovation giants team up with the Japanese government to develop the technology.

According to a Bloomberg report, Japan has brought together an initial group of 21 organizations in a government-led setup to shape the first generation of flying cars. Aerospace giant Boeing Co. (BA) and transportation giant Uber Technologies will be primary partners of the high-tech project.

Companies that are also part of the group include Airbus SE, Cartivator (a Toyota Motor Corp.-funded start-up), Japan Airlines Co. JAPSY , ANA Holdings Inc. ALNPY , Yamato Holdings Co., NEC Corp. and others, as stated by Japan's trade ministry in Tokyo on Aug 24. Delegates from the concerned companies will assemble on Aug 29 to devise a strategy this year, according to the statement.

Although Japanese automakers are yet to announce any plans of developing flying cars, it is anticipated that they will take part in their government's initiative soon. As the futuristic technology of flying cars could become a necessity in a decade, betting on shares of the companies that might play a key role in converting this science fiction into reality could be a wise decision.

Flying Meets Driving

Flying cars are the ultimate solution to urban traffic congestion and therefore could be attractive to modern-day travelers who are tired of being stuck in traffic. This innovation will bring airborne taxis, flying recreational vehicles and passenger drones. This new industry will combine aerospace, technology and auto companies.

Japan, a nation that has lagged the world in self-driving cars and electric vehicles, is racing to develop the necessary aircraft technology and infrastructure to accommodate airborne vehicles. With the government actively participating in the initiative, the new industry is expected to set safety standards for flyers and gain approvals from numerous regulators soon.

Japan's Ministry of Economy, Trade and Industry said on Aug 24 that it plans to request $40.4 million in funds as part of the government's fiscal 2019 budget to develop the required technology.

The Asian country has chosen to work with top companies that are already working on the required technology. Uber, for instance, will invest $23.5 million over the next five years in a new facility in Paris for the advancement of Uber Elevate, the company's initiative to develop flying cars. Boeing and Airbus are working on their aviation innovations that can equip vehicles with vertical landing and take-off options.

Apart from Uber, Boeing and Airbus, other top companies that are working on the technology include Daimler AG DDAIF , Volkswagen AG VLKAY and Geely Automobile Holdings Ltd.

Germany's eVolo, China's EHang and Slovakia's AeroMobil are some of the privately-held companies that are working on the concept of flying cars.

Stocks to Watch

The vision of this new industry puts some of the leading aviation and auto companies on the map that could gain the most from it. Therefore, monitoring these stocks and investing in them at the right time could ensure solid returns.

The Boeing CompanyBA is the world's largest aerospace company and a leading manufacturer of airplanes, jets, missiles and defense, security and space systems.

Boeing carries a Zacks Rank #3 (Hold). Its shares have gained 20% year to date. The Zacks Consensus Estimate for earnings has seen an upward revision of 0.2% for the current year in the past four weeks.

Airbus GroupEADSY manufactures military equipment and airplanes and carries a Zacks Rank #3. The company's shares have gained 27.2% year to date.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Toyota Motor CorporationTM manufactures, sells, repairs and leases passenger cars, boats, trucks, airplanes and more in Japan and abroad. Toyota Motor holds a Zacks Rank #3. Over the last 30 days, the Zacks Consensus Estimate for earnings has seen an upward revision of 0.1% for the current year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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