The need to stay current on nanotechnology developments is particularly evident for the global, large-cap companies with operations targeting the built environment. To this effect, leading multinationals are investing in energy platforms and specific software, as well as entering into acquisitions and strategic partnerships.
In July 2011, diversified technology company Johnson Controls, Inc. (profiled on page 16) completed the acquisition of EnergyConnect Group, Inc., a provider of smart grid demand response services and technologies, for $32.3 million. Prior to that, in May 2010, Honeywell International Inc. (also profiled on page 16) acquired its own smart grid arm, San Rafael, California-based Akuacom, a provider of automated demand response technology and services for the smart grid. Similarly, global chemicals company DuPont (DD-NYSE) completed the acquisition of California-based solar startup Innovalight, Inc. ( www.innovalight.com ) in July 2011 (as further described on page 38).
Siemens AG (profiled on page 17) is also invested in smart energy technologies. InDecember 2010, its Building Technologies Division acquired Texas-based Site Controls, LLC, a supplier of enterprise-wide energy management solutions for multisite commercial businesses. Siemens is further partnered with smart grid company Tendril Networks Inc. (profiled on page 53). Since 2000, Siemens' venture capital arm has invested more than €30 million in smart grid technologies, systematically building a portfolio of companies that provide technologies and solutions for grid management, energy efficiency, demand response, and electric vehicle infrastructure (Source: Tendril's June 13, 2011, Press Release).
Eoin Treacy's view The vast majority of the listed companies mentioned in this report have appeared in various chart reviews of interesting sectors over the last year. However, where this report is particularly helpful is in how it reveals a common thread between the engineering, chemical, building and materials sectors. Since a great deal of capital is required to commercialise such new technologies, the pace of acquisitions is likely to remain brisk.
BASF found support in the region of the 200-day MA from mid-November and rallied impressively to post new all-time highs. Some consolidation of this powerful six-week rally looks likely but a sustained move below the 200-day MA, currently near €63, would be required to question medium-term potential for additional upside. (Also see Comment of the Day on August 7th).
Sherwin Williams doubled in the year to October and has lost momentum somewhat as it reverts towards the mean. A sustained move below the 200-day MA would be required to question medium-term upside potential. (Also see Comment of the Day on October 24th).
General Electric broke out of its base in July and has been consolidating mostly above $20 since. It has returned to test the region of the 200-day MA and a sustained move below $20 would be required to question medium-term scope for additional upside. (Also see Comment of the Day on December 20th).
Siemens has been ranging below €80 since mid-2011 and broke successfully back above that level three weeks ago. While slightly overbought in the very short term, a sustained move below the 200-day MA, currently near €76, would be required to check medium-term scope for additional upside.
Honeywell has been ranging in the region of its previous peak since October and found support near of the 200-day MA from November. It rallied to post a new all-time high this week and a countermanding downward dynamic would be required to check potential for further upside. (Also see Comment of the Day on November 16th).
Johnson Controls has found support in the region of $25 on successive occasions since late 2009 and bounced from that area again six weeks ago. While overbought in the very short term, a sustained move below the 200-day, currently near $28, would be required to check medium-term potential for further upside. (Also see Comment of the Day on August 10th).
Precision Castparts moved to acquire Titanium Metals earlier this month. The share spent most of the year ranging below $180 but rallied impressively from November to post a new all-time high. While some consolidation of this gain appears likely, a sustained move below $170 would be required to question medium-term upside potential. (Also see Comment of the Day on May 31st).
Among medium sized companies, Cabot Corp rallied to break its six-month progression of lower rally highs earlier this month and while mildly overbought in the short-term a sustained move below $37.50 would be required to question medium-term upside potential.
Calgon Carbon Corp has been confined to a range since 2008 and has exhibited a downward bias for nearly two-years. It has rallied over the last six weeks to test the progression of lower rally highs but a sustained move above $15 will be required to confirm a return to demand dominance beyond the short term.
Hexcel Corp has been ranging in the region of the 2008 highs for most of the year and rallied to retest the upper boundary over the last month. While overbought in the short-term, a sustained move below $25 would be required to question medium-term scope for further upside. (Also see Comment of the Day on February 2nd).
Schulman (A.) Inc. has been confined to a volatile range since 2006 but rallied impressively from mid-November to post new all-time highs. The share is overbought in the short term so some consolidation of recent gains is becoming increasingly likely. However, a sustained move below the 200-day MA, currently near $24, would be required to check medium-term scope for additional upside.
David's piece on industrialising the internet from Comment of the Day on November 26th may also be of interest. In this regard, Rolls Royce is also worthy of mention and as a truly globally oriented company also qualifies as an Autonomy. The share continues to find support in the region of the 200-day MA and a sustained move below 800p would be required to question medium-term potential for continued higher to lateral ranging.
In conclusion, the return of the industrial sector to a position of outperformance has been evident since Q3. In the first half of the year the perceived wisdom was: recessions in the world's major economies were all but inevitable but since then the Eurozone has moved into convalescence, China exhibits a renewed sense of vigour and despite short-term concerns about the fiscal cliff, the US economy has a number of internal strengths. Since the industrial sector is sensitive to global growth perceptions it has therefore attracted investor interest.
In addition, as the above report explains, the evolution of nanotechnology is swiftly approaching commercial success and this could represent a significant growth avenue for related companies. This is particularly noteworthy because of the number of shares breaking out to new all-time highs and completing lengthy consolidations in the process. While short-term overbought conditions are evident for a number of these shares, the benefit of the doubt can continue to be given to the medium-term upside, provided they hold in the region of their 200-day MAs during their occasional corrective phases.