Christ Yoder
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Market crashes, double-digit corrections, and periods of heightened volatility are more common than you probably think. However, patience pays off for long-term investors. Since 1980, the benchmark S&P 500 has averaged a total annual return, including dividend payments, of 11%. That’s good enough to double your money with dividend reinvestment in about 6.5 years.
The key to making money on Wall Street is identifying the game changing trends and embracing those long term trends. If you have $ 10,000 in cash on hand, which won’t be needed in an emergency or to pay bills, that’s more than enough to buy into five of today’s most unstoppable trends.
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Cyber security
One of the most secure double-digit growth opportunities over the next decade is cybersecurity.
As businesses have moved their presence online and into the cloud, the responsibility for protecting corporate and customer data increasingly falls on third-party vendors. Additionally, as data hacking attempts become more sophisticated and efficient, cybersecurity has effectively become a basic service for businesses of all sizes, regardless of economic performance.
As an example, we’ve seen business demand soar for a specialist in cloud-based identity verification solutions. Okta (NASDAQ: OKTA). Okta’s identity solutions are cloud native and powered by artificial intelligence (AI). In English, this means that its platform is getting smarter to identify and respond to threats at all times. Since Okta’s platform is built in the cloud, its response time and effectiveness against threats is often far more impressive than on-premises security solutions. The overall cost of keeping hackers at bay tends to be cheaper with cloud-based third-party vendors than on-premises security options.
Although investors pay a pretty penny to buy cybersecurity stocks, their long-term future looks incredibly bright.
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Cannabis
If you live in one of the 36 states that have legalized marijuana to some extent, you probably don’t need me to tell you that cannabis is booming in the United States. New Frontier Data has estimated that average annual sales growth through 2025 will be 21%, ultimately leading to $ 41.5 billion in sales by the middle of the decade.
Notice I’m not mentioning Canadian cannabis stocks in this discussion? The simple reason is that we don’t know if or when the US federal government is going to change its stance on marijuana. Without removing the pot from the list of controlled substances, Canadian cannabis stocks are grappling with the regulatory disaster known as the Canadian marijuana market. In other words, the marijuana stocks in the United States are where you want to consider putting your money into.
A good example here would be the multistate operator Cresco Laboratories (OTC: CRLBF). Once all the acquisitions are complete, Cresco will have around three dozen operating dispensaries and enough licenses in its back pocket to open another dozen outlets.
More importantly, Cresco is one of the few companies to hold a license to distribute cannabis in California. Even though wholesale cannabis produces lower margins compared to the retail side of the equation, simply operating in the world’s largest weed market makes it a moot point. Cresco can place potted products in nearly 600 dispensaries statewide, allowing it to bank.
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FinTech
Another absolutely unstoppable trend that you can invest $ 10,000 in right now is fintech, that is, companies involved in financial technology products or services, such as digital or peer-to-peer payments. . According to a report by MarketDataForecast.com, the global fintech market may grow north of 22% per year between 2020 and 2025.
Why fintech? The most compelling answer is that they can speed up the processing and settlement of payments, especially when crossing borders. Financial technology services also hold the key to reducing the costs of payment transactions. It’s no secret why we’ve seen central banks encourage the use of mobile and digital banking. And finally, fintech can help level the playing field in underbanked regions of the world by providing underbanked people access to traditional financial services.
Square (NYSE: SQ) is the perfect example of a company that embodies both traditional payments and game-changing financial services technology. On the one hand, Square’s seller ecosystem processes credit card payments on its network through point-of-sale solutions provided to its merchants. Last year, more than $ 112 billion in gross payment volume passed through its network.
On the other hand, Square Cash App’s peer-to-peer digital payment platform looks like a revolutionary service. It allows users to pay merchants, transfer to and from traditional bank accounts, and invest their money. This includes buying the world’s most popular cryptocurrency, Bitcoin.
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Caring for an animal
Even though this is the slowest growth of the five unstoppable trends, pet care is the one that I’m most confident will continue to grow no matter what happens with the U.S. economy. and global.
Data from the American Pet Products Association shows that pet ownership has increased from 56% of all US households in 1988 to 67% of all US households by 2019-2020. Plus, year-over-year spending on pets has not declined for at least a quarter of a century. This year, approximately $ 109.6 billion will be spent on pets in the United States, with $ 44.1 billion going on food and treats and $ 32.3 billion on veterinary care and sales of products.
A good example of a business poised to thrive on increased spending on pets is the insurer Trupanion (NASDAQ: TRUP). It ended March with nearly 944,000 pets enrolled, many of which are part of its high margin subscription business. The crazy thing is that 944,000 pets only represent a penetration rate of about 1% in the United States. If Trupanion achieved the UK pet insurance penetration rate of 25%, its addressable market would be over $ 32 billion.
Additionally, Trupanion has established clinical-level relationships for two decades, and is the only major pet insurer to offer software to manage payment at the time of payment.
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Telehealth
Last but not least, telehealth has all the characteristics of a transformative trend with strong growth in the field of health.
I know what you’re probably thinking, and you’re right – the pandemic has absolutely helped businesses focus on telemedicine. But it’s important to recognize that telehealth has grown at an unusually rapid rate in the years leading up to the pandemic, and it will continue to do so thereafter. This is because virtual visit platforms are more convenient for patients, they can help physicians better monitor patients with chronic illnesses, and they are billed at a lower rate than office visits, which insurers will love.
The telehealth name to have is Teladoc Health (NYSE: TDOC). Teladoc handled 10.59 million virtual visits in 2020 and is on track to oversee a median estimate of 13 million visits this year. This is an increase from 4.14 million in 2019. Teladoc saw an average sales growth of 74% per year in the six years leading up to the pandemic, and this will likely be one of the healthcare actions in fastest growing large cap of this decade.
Also, don’t forget that Teladoc acquired the applied health signals company Livongo Health in the fourth quarter of 2020. Livongo uses AI to send advice and nudges to chronically ill patients to help them lead. a healthier life. It was profitable on a recurring basis upon acquisition and roughly doubled its membership base each year.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
