2-for1 Sale
Self-driving automobiles are likely going to be one of the biggest technological advancements of our time, and investors would be wise to get in early on companies involved in the industry that are likely to benefit from these growth opportunities. Along with electric-powered vehicles, there are many changes taking place in the industry that, decades from now, might not even bear resemblance to what is commonplace today.
I am going to focus on two companies that could see tremendous growth, as the self-driving revolution continues to change the future of the industry.
BlackBerry Ltd. (TSX:BB)(NASADQ:BBRY) recently tested a self-driving car with the company’s QNX software, which will integrate with what John Wall of BlackBerry refers to as “the brain” that individual manufacturers will work on designing. By providing a unique self-driving experience, each manufacturer will be able to find a way to meet the specific needs and tastes of its customers, rather than relying on an off-the-shelf solution from a third party. The other advantage of creating a system in-house is that it allows the manufacturer to develop its own expertise and potentially proprietary systems that cannot be easily duplicated.
As we saw with the smartphone industry, the arms race starts early, and any edge that a company can have early on will lead to big gains, and the auto industry could be no exception. How the better equipped BlackBerry’s software will be able to handle these different systems will determine how widely used its software will be. One thing we have seen so far from the tech company is that BlackBerry is a brand that has proven it can adapt to the changing needs and expectations of its customers.
Magna International Inc. (TSX:MG)(NYSE:MGA) is a producer of auto parts, and it recently announced that it would be working with BMW and Intel Corporation to help create “the brain,” the self-driving platform that could integrate with software like BlackBerry’s QNX. The goal for the companies is to develop a system that could have autonomous vehicles on the road by 2021. Although true automation is still many years away, some vehicles are already equipped with technologies that use sensors which can help you brake if an object is near and to help you stay in your lane.
As companies develop more of these different features, there could be an endless spectrum of possibilities as to what self-driving vehicles might be able to do. All we need to do is look at the advancement of mobile phones and how technology changed those devices in the last decade. Self-driving vehicles could present similar opportunities for companies like BlackBerry and Magna that could be central to the changes coming in the industry.
Bottom line
Both of these companies could be great buys for the long term, and neither are valued very highly considering the potential lucrative returns that the two stocks might offer investors. Magna trades at less than 10 times its earnings, while BlackBerry is at a multiple of just 13. If these companies are able to realize their potential growth, then these prices would be terrific bargains today.
