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Autonomous vehicles, whether they're cars, trucks, or something in between, have the potential to be enormously disruptive to the status quo in good ways and bad.
There's a fascinating tidbit - a prediction, really - I came across in my research; I'll share it with you because I think it perfectly illustrates the disruptive potential and peril of these things.
The U.S. government's own numbers indicate 94% of vehicle accidents are our fault, that is, human error. In the paper, Autonomous Vehicles and Public Health, the authors estimate that the healthcare industry may face a $500 billion loss resulting from the decrease in traffic injuries as self-driving vehicles come to dominate U.S. roads. The same paper goes on to estimate as many as 10 million lives per decade may be saved worldwide.
Fantastic news if you're a person, but pretty ominous for the healthcare industry, I'd say. The predictions and estimates go on and on, but throughout history, when a development has been as disruptive as AVs could be, huge fortunes have been won and lost.
I've got a classic "cheap stock" in mind for us to make sure we're winners in the autonomous driving revolution.
You can own this company for less than the price of a decent hamburger in most places, putting you in position to collect massive upside - at least 100% profits - from this unstoppable trend.
Self-Driving Vehicles Would Be Impossible Without This Tech
Anyone could build a track between point A and point B and have a vehicle travel along the track with little to no human intervention.
But a vehicle that's well and truly autonomous, traveling on preexisting surface roads and highways, needs a digital brain, eyes, and even ears to fill in for a human. We've got the brains pretty well covered; there are existing computer processors that can easily process the myriad inputs bombarding the AV systems. That's no sweat.
But it's the eye-brain connection that's the Holy Grail of self-driving vehicle production. To make that vital link, engineers are turning to powerful sensors and LiDAR systems to enable the car to sense the world around it - a kid chasing a toy into the street, the jerk tailgating you, a bicyclist riding alongside, a sedan four car lengths ahead - LiDAR catches it all, ensuring the vehicle's "brain" or "brains" react accordingly.
A LiDAR (light detection and ranging) system determines variable distances by firing a laser at an object and measuring the time it takes for the reflected light to return; it's like a laser scanner used for ultra-accurate "maps" of pretty much anything you point it at. LiDAR has given us high-fidelity maps of everything from forests, down to the last leaf and twig, to the surfaces of Mars, the Moon, and Mercury. In fact, the Ingenuity helicopter flying short hops across the surface of Mars is using LiDAR as we speak.
So you can see why most, though not all, in the AV industry have come to see LiDAR as the gold standard.
The only drawback is that the systems and sensors needed to operate LiDAR and integrate it with the vehicle are pricey; that's a huge consideration for the companies making these vehicles. Tesla Inc.'s (NASDAQ: TSLA) Elon Musk has said his AVs will never use the tech; he prefers to rely on optical systems, traditional radar, and to some extent, ultrasound. Tesla's refusal to use LiDAR technology, coupled with the widespread perception that Tesla has already "won" the "AR race" (it hasn't), has put LiDAR stocks under some pressure since this past spring.
That's setting the stage for one of the market's real value plays in the AV space...
An Overlooked Value Stock
So, as I said, the market has doubts about LiDAR - but I don't share those doubts. Tesla might avoid the tech, but there are far more companies who embrace it, including giants like BMW and General Motors Co.
There are six real players in this segment, but my favorite one right now is Innoviz Technologies Inc. (NASDAQ: INVZ), operating out of Rosh HaAyin, Israel.
Innoviz makes LiDAR and sensors that come "out of the box" and can easily integrate with software running a variety of AV platforms, whether that's passenger cars, taxis and shuttles, or commercial trucks. It's also dedicated to making its products cheaper than the competition.
The shares are currently trading for less than $7, which is an impossibly low price for a company that gets you into a market that could top $518 billion by 2027.
There's a lot going on under the hood here, but a quick peek at just two valuation metrics reveals Innoviz just might be the value play in the LiDAR segment; its price-to-sales ratio is 2.6, compared to 9.3 for Luminar Technologies Inc. (NASDAQ: LAZR), the popular "it" stock in the group. Not only that, but its price to book value is 2.66. A lot of old-school value investors use 1 as their benchmark here, but in this space, anything under 3 should be considered a decent value and a good buy.
Analysts have some very bullish targets for INVZ over the next 12 months, ranging from $10 on the low end all the way to $13, which would mean more than 100% profits from today's price.
Like I said at the start, the wholesale transformation of vehicles is going to bring about incredible profit opportunities. Autonomous vehicles, and especially electric vehicles (EVs), have the potential to generate outrageous wealth for folks there at the beginning.
I know one EV company in particular. It's very small right now, around $2 or so... but it's already been on a 1,100%-plus gain over the past year. Now it's looking to go public in the United States, which means last year's incredible run could repeat all over again - or possibly go even further. The listing could potentially happen any day now, and you don't want to miss out. My colleague Michael Robinson has details on that stock here...
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.