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All Contents © 2019The Kiplinger Washington Editors
By Will Ashworth
| February 12, 2018
Amazon.com (AMZN) made a major announcement Jan. 22. After more than a year getting the bugs out, the Seattle e-commerce company opened Amazon Go to the public.
Using artificial intelligence and cameras to keep tabs on the shoppers in the store — Amazon Go provides cashier-free grocery shopping — technology is changing the way consumers shop for groceries.
One of its customers is Amazon CEO, Jeff Bezos.
“Jeff [Bezos] has been aware. He loves the store — he definitely has shopped it,” VP of Amazon Go Gianna Puerini said. “He’s been super supportive and wonderful.”
So, depending on your point of view, Amazon is either a tech company using e-commerce as its end product or service or an e-commerce company using tech to sell its products and services.
While it’s using technology to grow its revenue, I’m going to pass on Amazon.
However, there’s no mistaking these seven stocks to buy that are all growing because of the intelligent use of new technology.
Prices and data are from the original InvestorPlace story published on Jan. 29. Click on ticker-symbol links in each slide for current prices and more.
Toyota Motor Corp TM) is one of the world’s largest automotive companies. To sell as many cars as it does, it needs supply chain management that’s second to none. Before its Jan. 23 announcement that it would start using Ottawa-based Kinaxis Inc’s cloud-based supply chain management solution, it was doing all of its planning by hand.
That’s no way for Toyota to be handling such a critical piece of its business planning.
“We are looking forward to working with Kinaxis to optimize inventory and enable more flexible responses to customer demand,” said Iwao Nakano, General Manager Corporate IT Division at Toyota. “RapidResponse will help us unify sales and production and will become the foundation upon which we can continue to realize improvement in demand and supply planning.”
Although Kinaxis isn’t well known outside Canada, many of its customers are; they’ve chosen the company’s RapidResponse solution because it dramatically improves supply chain management. Expect this to make Toyota even more efficient than it already is.
If I told you that technology could help McDonald’s (MCD) improve its comparable store sales by 100 basis points in 2018 alone, would you buy the Golden Arches’ stock? I sure would.
“MCD is cultivating a digital platform through mobile ordering and Experience of the Future (EOTF), an in-store technological overhaul most conspicuous through kiosk ordering and table delivery,” Cowen & Company analyst Andrew Charles wrote in a note to clients last June. “Our analysis suggests efforts should bear fruit in 2018 with a combined 130 bps [basis points] contribution to U.S. comps [comparable sales].”
In Q3 2017, McDonald’s grew its global comps by 6%. Through the first nine months of fiscal 2017, those comps rose by 5.6%, which means a 130 basis point increase amounts to a 23% gain.
Combine these technology initiatives with the rollout of its $1 $2 $3 Dollar Menu and it’s no wonder MCD stock is hitting all-time highs.
The MIT Technology Review named Adidas (ADDYY) one of its 50 Smartest Companies 2017.
“The sneaker maker is changing the way it manufacturers shoes, launching a robot-intensive microfactory in Ansbach, Germany, where it will begin to produce locally and on demand later this year.,” stated the magazine. “A similar factory offering customization and faster reaction times to local fashion trends has been announced in the U.S.”
In addition to its move to robotics, it’s working with another company on MIT’s list — Carbon is ranked 18th — to deliver state-of-the-art athletic equipment including 4D shoes. According to the magazine, Adidas will print 100,000 pairs of shoes using Carbon’s technology by the end of 2018.
“Technology has also allowed Adidas to streamline some operations while also improving customer experience,” the Sourcing Journal’s Caletha Crawford wrote Jan. 18. “By teaming with FindMine, which uses visual algorithms to help merchandise products online, Adidas is able to better curate suggestions for shoppers.”
Given how much growth Adidas experienced in 2017, it’s clear the investment in technology by the company is paying dividends.
A definite upside to Amazon capturing such a big chunk of U.S. e-commerce sales — estimated at 44% in 2017 — is that Walmart (WMT) has been forced to get proactive about the use of technology, especially when it comes to online sales.
“Once viewed as a customer experience laggard, Walmart has turned to innovative tech to stay relevant, even leapfrogging some of the big e-tailers with a bold vision, …” stated Brennan Wilkie, an expert in customer experience intelligence, in an October 2017 article in Forbes. “At the end of the day, if what a brand promises does not line up with what customers want and expect, all the newfangled technology in the world won’t matter.”
InvestorPlace contributor Lawrence Meyers recently wrote that Walmart’s acquisition of Jet.com was a smart move to accelerate the company’s online ambitions. However, he’s not sure it will make a difference to the bottom line which has been slowly deteriorating in recent years.
I, on the other hand, consider Walmart’s willingness to embrace technology as a sign it’s willing to do whatever it takes to turnaround its business. Given WMT stock gained 46% in 2017, other investors feel the same.
Fiserv (FISV), one of the World Most Admired Companies according to Fortune, is using technology and automation to provide a better digital experience for financial services customers. For many banks, the transition between physical banking and digital banking is anything but seamless. It’s Fiserv’s job to make that more fluid.
By introducing new products such as voice banking through devices such as Alexa and other uses of artificial intelligence, the company hopes to bridge the gap.
“We need to begin to change the mindset,” Jamie Dominguez, director of product management for financial technology provider Fiserv told Bank Innovation. “Digital isn’t just about mobile and online, it’s really about a fluid experience.”
The use of technology to help financial institutions innovate has been profitable for FISV shareholders in recent years. Up almost 7% year to date through January 24, Fiserv hasn’t had a negative annual total return since 2008.
My instincts tell me Fiserv shareholders will continue to reward in the years ahead.
Nasdaq (NDAQ) is the world’s largest operator of stock exchanges. It has embraced technology throughout its history, whether we’re talking about the introduction of electronic trading in 1971 or recently by using machine learning and data analytics to provide investors with the most comprehensive information and analysis possible.
Nasdaq had three priorities to execute this past year, one of which was to commercialize disruptive technologies such as blockchain, the cloud, and machine learning.
In November, Nasdaq filed a patent application with the U.S. Patent and Trademark Office that would create distributed ledgers using blockchain technology to store information regarding the ownership of assets.
“The application notes each block’s cryptographic hash value as an attractive feature, stating that the fact that a blockchain cannot be modified by malicious actors acts as an effective security function in protecting asset ownership data,” wrote Coindesk’s Nikhilesh De on Nov. 17, 2017.
Although Nasdaq admits that a lot more research is necessary before it would implement this technology, it’s easy to see why this is a significant development. For example, in places where the rule of law isn’t quite as robust, a secure and private network detailing the ownership of assets would provide greater protection for investors.
This type of innovation is what you want from a company like Nasdaq.
Stitch Fix (SFIX) went public Nov. 16, 2017, at $15 a share. Since then, the online personal-styling service and clothing retailer’s stock is up 39.1% through Jan. 24.
Stitch Fix has taken mass customization to the limits using algorithms to figure out what customers want to wear.
“Like many personalized radio services (think Pandora), this service is designed to get better the more that you use it,” stated Stitch Fix founder Katrina Lake in a 2015 interview with Harvard Business Review. “Algorithms produce recommendations for stylists who use their personal experience and knowledge of the customer to curate those recommendations down to just five items per fix. As you purchase, answer questions and/or communicate with your stylist, each fix becomes increasingly accurate.”
People are starved for time. The number one rule for a creating a successful business, in my opinion, is to offer something to your customers that save people time or money. Stitch Fix does both.
As far as the seven stocks to buy winning with tech go, Stitch Fix is at the top of the list. Its service is tailored perfectly to the modern shopper.
This article is from Will Ashworth of InvestorPlace. As of this writing, Ashworth did not personally hold a position in any of the aforementioned securities.
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