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Citigroup Top Stock Picks Range From Psychedelic Drugs to NFTs

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(Bloomberg) -- New technologies from psychedelic drugs to low-carbon transportation that are being adopted at an increasingly fast pace offer stock-picking opportunities for investors, according to Citigroup Inc.

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Companies including General Electric Co., Rolls-Royce Holdings Plc, Walt Disney Co. and German biotech ATAI Life Sciences NV are among the stocks highlighted in the investment bank’s latest “Disruptive Innovations” report, published Tuesday.

The pandemic has helped to drive an acceleration in the adoption of new technologies that’s been bolstered by “a readily available pool of capital to fund innovation,” according to the report. Citigroup has previously flagged e-cigarettes, autonomous driving and blockchain as key themes in previous reports on disruptive innovations.

Here are some areas highlighted by the analysts in the latest report:

Non-fungible Tokens

Non-fungible tokens will allow owners of intellectual property such as Disney and French video-game company Ubisoft Entertainment SA to eliminate intermediaries and take a cut each time in-game currencies or collectibles are traded, according to analyst Thomas Singlehurst. Companies such as Robinhood Markets Inc. will benefit from increased trading of NFTs, according to the firm.

Psychedelic Drugs

The use of psychedelic drugs to treat mental health conditions is making a comeback, with academic studies over the last 20-25 years showing potential for a “therapeutic benefit when used under supervision of a health-care provider,” Citi wrote. ATAI Life Sciences and Compass Pathways Plc are among companies developing psychedelic medicines and conducting clinical trials, analyst Neena Bitritto-Garg wrote.

Ammonia Propulsion in Jet Engines

With carbon emissions increasingly in focus, ammonia propulsion has emerged as a possible solution for the aviation industry -- though the largest ammonia makers are still in the very early stages of exploring how to produce green ammonia at scale. Adopting ammonia propulsion in aviation would be beneficial for existing engine makers including GE, Rolls-Royce and MTU Aero Engines AG, as well as fertilizer producers such as Yara International ASA and CF Industries Holdings Inc., according to analysts Pavan Daswani and Charles Armitage.

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