What Do I Need to Know About RFID Stocks?

Why RFID is Struggling

The RFID industry is still small enough that volatility is a big factor. Until RFID becomes more widely adopted, that's not likely to change. It's on its way, but it's not there yet.

Another thing to think about is the fact that many of the pure RFID stocks out there are penny stocks (to learn more about penny stocks, click here) which can add another element of risk to investing in this industry. Also, as large companies whose primary businesses are not RFID -- like Texas Instruments TXN and Hewlett-Packard HPQ -- pour lots of money into developing their own RFID businesses, pure plays may continue to struggle.

Researching RFID Stocks

If after hearing all the admonishments against RFID stocks, you're still interested in putting your money in this technology, consider this: when doing your fundamental homework on the RFID players, keep in mind that the companies that deal exclusively with RFID are very susceptible to the conditions of the RFID industry as a whole. So make sure that you're informed of the latest industry-wide changes and trends, by reading trade publications like RFID Journal and the RFID Weblog. These resources will keep you at least a little current on the industry's happenings, which play a big role in driving stock prices for a lot of the pure RFID plays out there.

For a list of companies involved in RFID, check out this page on RFIDInvesting.com.

RFID Wrap Up

Right now, RFID is definitely an interesting area to be in. The next few years should be equally interesting as big tech companies enhance their RFID presence. Smaller ones will have to either adapt or get out ("How to Play the M&A Game"). Personally, I don't think that the majority of the risk here involves whether or not RFID will ultimately be adopted more widely, it's more a question of whether or not the current niche players in the industry (or the ones yet to emerge) will make it through this rough spot.