JBL: Cutting Edge

It pays to be in stocks that can ride out any economic storms. Earlier I had written about a potential play on the ethanol boom; today we're turning our sights to the emerging technology of RFID.

But first, a recap of where we stand with ethanol. The Bush administration and Congress don't want to give in to WTO pressure to lower or eliminate farm subsidies, and this refusal has resulted in increased tensions with other world powers (imagine that, the U.S. having tension with other world powers). The administration feels that lowering farm subsidies without a clear indication that America's crops can have unabated access to overseas markets would be unfair to our own farmers.

I believe both Democrats and Republicans don't want to alienate a huge voting block in the Midwest. However, the farm subsidies, especially on corn, could be removed without much shock to the system.

There has been a tremendous amount of speculation on how much ethanol corn can produce. One thing is certain: Every kernel of corn that would have been sent overseas can be used here for ethanol.

I was one of the first to write about John Deere (DE Quote) as a play on ethanol, and I still believe it is a great investment. Even without the farm subsidies -- and more importantly, even if the economy slows -- Deere is still a great play. Simply because Deere is tied to a huge booming product in ethanol, it is not as closely tied to the economy as it has been historically.

Deere has fallen from a high of more than $93 to the low $70s. I still own this stock and believe it is a way to profit from the ethanol boom.

Another boom that will continue despite the economic surroundings is RFID (radio frequency identification) technology. Alien Technology (symbol RFID, of course), was due to make its debut in an IPO Friday, but the date was pushed back to next week.

RFID technology is replacing the bar code as a simple way of tracking supply that doesn't require people on the ground. There will come a time in the very near future when a consumer will go into a store, pull his cart up to the register and and have all his purchases rung up automatically. At the same time, the company's warehouse will receive a message that the purchased items are no longer on the store's shelves. RFID technology already is being used for theft prevention by pharmaceutical companies.

Alien is going to be the low-cost provider of this technology. The inflection point, which is just about to be reached, is 5 cents per tag.

To view John Layfield's video take of this column, click here.