If 2020 has taught investors something, it’s the power to invest for the long term and stick to your initial investment thesis, even if big hiccups arise.
He also taught investors that you don’t have to be rich to get rich on the stock market. If you have $ 5,000 in cash at your disposal that won’t be needed to pay bills or for emergencies, then you have more than enough capital to work in some of the fastest growing industries in the new bull market. Here are five areas in which you would be smart to consider buying now with $ 5,000.
If these industries were presented in a particular order (which they are not), cloud computing would likely top the list. Even before COVID-19 became a serious concern, we were already witnessing a steady transition to remote and shared work capabilities. COVID-19 simply provided a shot in the arm to facilitate this transformation even faster. In my mind, there is no doubt that cloud growth should always remain double-digit on an annual basis throughout this decade.
While there is no shortage of cloud service companies to choose from, the e-commerce giant Amazone (NASDAQ: AMZN) could be the preferred stock to own. Amazon Web Services (AWS) works as an infrastructure-as-a-service player, which is an elegant way of saying that it provides small and medium-sized businesses with the tools they need to form the building blocks of their platform. cloud. In just five quarters, AWS has grown from 11% of total Amazon sales to 13.5% of total sales, while accounting for the lion’s share of its first quarter operating profit.
Make no mistake, high-margin cloud sales will generate insane cash flow for Amazon and other cloud service providers.
If there is one such industry to buy, it’s cybersecurity. No matter how well the United States and the global economy perform, hackers don’t take time off. This makes the hardware and subscription protection services provided by cybersecurity companies an absolute necessity. And with more companies than ever before in the cloud, there is a growing need for more sophisticated security solutions.
Here I continue to be a fan of what Palo Alto Networks (NYSE: PANW) fact. In recent quarters, Palo Alto has focused on physical firewalls in favor of higher margin subscription and support services. This will lead to more consistent revenue recognition and should help reduce the low customer churn rate that the business faces. And yes, it will also help improve operating margins in the long term.
Palo Alto has also diversified its product offerings through numerous complementary acquisitions. Expect the company to continue to aggressively spend on innovation and inorganic growth to improve its cloud protection market share.
The cannabis industry is a bit bad, as the bubble has finally burst in jar stocks in the past 15 months. Supply issues in our North, high tax rates in some US markets, and funding problems across North America have forced investors to be cautious.
But it is still an industry where tens of billions of dollars in sales are made each year on the black market. These illicit channels are expected to gradually give way to legal sales over time and offer the North American marijuana industry a double-digit growth opportunity for much of the 2020s.
An intriguing name to consider here is Green Thumb Industries (OTC: GTBI.F). Green Thumb is a multi-state operator with 48 dispensaries open and licenses to open up to 96 stores in a dozen states. Green Thumb currently generates around two-thirds of its revenue from higher-margin derivatives, rather than dried cannabis flowers, which is a big reason why it seems to be on the verge of recurring profitability.
In addition, Green Thumb has established a significant presence in Illinois, which opened for recreational weed sales on January 1, 2020, as well as in Nevada, which has the potential to become the country’s leader in per capita cannabis spending by the middle of the decade. .
Internet of things
Another industry that appears to be growing is the Internet of Things (IoT). By IoT, I’m talking about wireless devices that can communicate with other wireless devices, as well as with data centers. Like marijuana, IoT appeared too quickly in the 2010s, but now has time to mature. This growing focus on technology that makes our lives easier is likely to have a positive impact on IoT businesses for years to come.
The name to look at here is NXP Semiconductors (NASDAQ: NXPI), which generated almost half of its turnover last year in the automotive industry, industrial equipment, communications and mobiles representing the rest of sales in 2019. In particular, NXP is a leader in equipment autonomous driving and sensors used in a number of newer automobiles. Between 2018 and 2021, NXP expects to deliver a compound annual growth rate of 7% to 10% (which includes 2021 as an estimate), which exceeds the CAGR for the IoT auto market by 5% to 7% during this same period. Frame.
In addition, don’t overlook other NXP growth engines, such as the adoption of mobile payment, the deployment of 5G networks and its scalability in industrial processing applications.
Finally, don’t forget the push of personalized medicine. Anything that meets individual patient needs, especially during a pandemic, is likely to see demand improve considerably in the long run.
As a perfect example, take a closer look Teladoc Health (NYSE: TDOC), which offers telemedicine visits to patients. These virtual visits are not only essential during the pandemic to ensure that sick people stay at home, but it is a much more practical method of organizing a consultation with a doctor. It also doesn’t hurt that telemedicine visits are generally cheaper for insurers.
During the first quarter affected by the pandemic, Teladoc reported an absurd 92% increase in virtual visits, with its number of paying members increasing by 61% to reach 43 million people in the United States. Access to visits only also increased by 89%. Although there is no doubt that Teladoc Health will continue to lose money in the short term by improving its platform and making complementary acquisitions, it clearly has the tools necessary to become a major player in personalized health care. over the next decade.