In my previous piece Nano or Bust, I warned of the perils of leaping blindly into the arms of the nano revolution. Individual stocks (and even stock funds) may have little more connection to the nanotechnology revolution than the letters n-a-n-o in their names. Even companies that have made legitimate technological breakthroughs may not have any products to sell for years, or profits for years beyond that. The trick is to find companies that have products today, and preferably profits with the potential to grow further with the industry.

I opined in the previous article that it's risky to buy into nano companies that offer the latest whiz-bang products. This early in the evolution of the industry, there is no way to tell which technologies will be the evolutionary equivalents of homo sapiens, and which will be relegated to the dust heap of history, alongside Neanderthal man.

A safer approach is to find the companies that sell "enabler" technologies that are used to improve other technologies: additives, sealants, lubricants, finishes, and other hidden-but-omnipresent enhancers, as well as the tools needed to create these enablers. It may be boring, but it's a lot better to be the company that sells a million gallons of paint additive a year to the car companies than to be the company that sells the fancy spinning hubcaps. Why? A year or two from now, fancy spinning hubcaps may be passé but cars will still need paint.

Last time, I pointed out a number of pseudo-nano stocks to avoid. This time, I'll drop the other shoe and highlight some true nano companies that are worth researching further. (It's too soon to be pointing out "winners" in this industry, but with tangible products and, in some cases, actual profits, these companies have a leg up on the competition.)

There are two categories of picks-and-shovels nano companies. The first makes nanoscale materials (those measured in nanometers, or billionths of a meter). The other makes the tools that allow the former to create the nanomaterials. (A third category of nanotechnology company also exists: nano-biotech -- but that field is still far too speculative to even consider for picks-and-shovels investment. They're still chimps on the evolutionary scale.)

Among nanomaterials companies consider:

Nanophase Technologies (NASDAQ:NANX). This firm produces nanocrystalline materials used in sunscreens, personal care applications, anti-fungal aids, automotive catalytic converters, and abrasion-resistant flooring. Its largest customer is BASF (OTC: BFASF). Nanophase lost $5.83 million on sales of $5.45 million in 2003. No, that's not a typo. It did indeed lose more than it earned in revenues.

NVE (NASDAQ:NVEC). NVE manufactures components that combine giant magnetoresistive (GMR) materials (used in computer disk drives, for example) with integrated circuits. Products include sensors, isolators, and magnetoresistive computer memory technology (MRAM). NVE is working with Motorola (NYSE:MOT), Cypress Semiconductor (NYSE:CY), and other computer vendors to produce MRAM memory. For 2003, NVE earned $2.11 million on revenues of $12.0 million.

Among nanotools suppliers consider:

FEI (NASDAQ:FEIC). FEI's products include electron microscopes and focused ion beam systems. Customers include semiconductor manufacturers, the data storage industry, and the industrial and life science industries. FEIC turned a $7.2 million profit last year on sales of $361 million.

JMAR Technologies (NASDAQ:JMAR). JMAR sells X-ray lithography and other nanoscale equipment to specialty semiconductor manufacturers. JMAR lost $3.28 million on revenues of $17.3 million in 2003.

Veeco Instruments (NASDAQ:VECO). Veeco sells a broad line of equipment to manufacturers in the data storage, semiconductor, compound semiconductor/wireless, and HB-LED industries. Veeco nearly broke even last year, losing $9.75 million on sales of $279.3 million, and finished with a strong fourth quarter.

This year looks promising for all these equipment manufacturers, as they ride the coattails of a turnaround in the semiconductor industry.

A final warning: Even though the preceding companies may have a head start on the rest of the players, the entire field is still highly speculative at this stage. Even homo sapiens can be clobbered by a Neanderthal who catches him napping. If you decide to invest in nanotechnology, be sure to do so with funds set aside for speculative endeavors, and not granny's nest egg.

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Fool contributor Mark T. Chapman is a technology writer who writes sci-fi, humor, and crossword puzzles in his spare time. He goes by Chapman208 on The Motley Fool discussion boards. Feel free to email him with comments, or publish his novels. Mark owns none of the companies mentioned in this article.