Hey, it's past 2015 and I still don't have that hoverboard that Back to the Future 2 said we would have by now. What gives?
A lot of the futuristic technology of our former sci-fi movies aren't here yet, but some of the things that we are looking at doing today -- communication, energy, artificial intelligence -- are way beyond that even the most ambitious sci-fi writer ever imagined.
So we asked three of our investing contributors to each highlight a company building the future. Here's why they picked IPG Photonics (NASDAQ: IPGP), First Solar (NASDAQ: FSLR), and Daimler AG (NASDAQOTH: DDAIF).
Image source: Getty Images.
Lasers are the tool of the future
Brian Stoffel (IPG Photonics): As far as commercially viable fiber-optic lasers go, IPG Photonics was the birthplace of the technology. For a long time, that didn't matter, as the lasers weren't powerful enough to match standards in a host of industries.
But under the guidance of founder and CEO Valentine Gapontsev, the lasers have gotten more and more powerful and precise, while requiring less energy to function. Add in the fact that IPG is the only vertically integrated player in its niche, and that yields an important cost advantage over the competition.
All of these factors have started to converge to help make IPG a company building the world of tomorrow. While the lasers have traditionally been used to cut huge pieces of metal, they are seeing increased adoption in other fields, like communications, consumer electronics, and medicine.
Because of these new applications -- and increased demand from China -- revenue has jumped 20% per year over the past two-and-a-half years while earnings have grown at a 21% rate over the same time frame. But management believes that only one-third of lasers used for cutting are fiber optic, meaning there's still plenty of room for growth.
The next phase in energy
Tyler Crowe (First Solar): In the history of energy consumption, once a new fuel source becomes cost competitive, it typically enjoys a window of 30-50 years of exponential growth. We already saw this trend play out with coal (1860-1910), petroleum (1920-1960), and natural gas (1930-1960). Over those time periods, the cost to generate power from these sources declined considerably and made energy that much more accessible to everyone and encouraged greater use. Today, solar energy has reached that cost threshold where the per-megawatt-hour costs of utility-scale solar installations are on par with other sources without subsidies.
If history is any indication, we are still in the very early innings of what could possibly be the next monumental shift in global energy production, and First Solar is one of the companies at the leading edge of that trend. The company continues to advance solar power technology to improve efficiency and economics. Its newest offering -- the Series 6 panel -- should be a major leap forward in panel efficiency, which will improve the economics of solar power even further. That will be key in the coming years as Bloomberg New Energy Finance estimates that global capital spending for energy will be $10.2 trillion between now and 2040. That is a massive market to capture, and it's looking like Solar power is set to enjoy the exponential growth we have seen with other energy sources in the past.