A number of applications in the energy sector are already in development. In particular in the fracking space, nanotech can be very helpful. One of the fundamental challenges in fracking is getting as much oil out of a well as possible. Oil is “thick” and so, when it is being withdrawn from a well, it tends to coagulate around the sides of the well resulting in a type of dendritic stick jump behavior.
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In other words, a lot of excess oil is lost on the sides of the well and becomes difficult to recover – sort of like the thin film of milk on the side of a glass. Nanotech films in wells can help to offset this. Similarly, in fracking, nanotech can help with can help with creating more effective forms of fracking proppants.
So on the whole, nanotech does have value, but investors should not be deluded into investing in what is really just a very wide branch of science. The key is to find specific applications and companies to invest in. For investors interested in a broad safe opportunity, conglomerate 3M (MMM) is a great choice. The firm makes numerous products, has a broad and deep R&D pipeline, and the stock generates an extremely reliable stream of revenues. The stock is not particularly cheap currently at a little under 20 time trailing twelve months EPS, but this is a case of investors paying for quality and a healthy 4 percent dividend.
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For those looking for a more focused investment option that also necessarily comes with higher risk, FEI Company (FEIC) is an interesting choice. The firm makes a variety of nanotech related products including a whole slew of products dedicated specifically to the energy industry. At the same time though, the product line is diversified enough that the current weakness in energy and commodities in general is not crippling the business as its robust earnings recently showed. The firm has a particular strength in scientific instruments related to nanotech, which makes its products less commoditized than many of the failed pure-play nanotech names of the last decade. The stock is even more expensive than 3M, but for investors who see nanotech developments slowly changing the way industry operates around the world, FEIC is definitely worth a look.
By Michael McDonald for Oilprice.com
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