This article first appeared in Trend Investing on July 5, 2019; therefore all data is as of this date.
In this article, I take a look at some newer trends that are starting now and have good investment potential. This article is not intended to immediately find investment ideas, but rather to look at the various newer trends, with a view towards future articles and specific investment ideas that may develop.
5G and the cloud
Both 5G and cloud storage and computing are hot trends with plenty of upside still to go.
You can read my latest 5G and cloud computing articles below:
- An Update On The 5G Sector And On My 5G Stock Picks
- A Look At Some Smaller Companies To Benefit From The Cloud Computing Trend
Biodegradable plastic ('bioplastic') refers to plastic made from plant or other biological material instead of petroleum that will break down naturally over time. The idea is not new, but interest in bioplastics is now rising rapidly.
Given we throw away ~500 billion plastic bags per year, and plastic is a very long term (> 100 years) environmental pollutant, it makes perfect sense to switch to bioplastics. It is quite likely governments will enforce this. Bioplastics are not yet a perfect answer, but a step in the right direction. As for which bioplastic will be the most popular, I am still working on that.
Some examples of popular biodegradable plastics are:
- Seaweed (view a video here).
- Lobster shells (view a video here).
- Sorghum flour
- Rice, Avocado seeds, banana peel, pineapple leaves, other plant leaves.
Mexican company Biofase is converting 15,000 tonnes of avocado seeds into bioplastics every day
- 13 Bioplastic Innovations That Might Save the Environment
- Top Bioplastics Producers – Bioplastics News
In 2018, global consumer cannabis spending was ~$12.2b, and in 2019, it is forecast to grow 38% to $16.9b.
2017 and 2018 were good years for investing in the cannabis sector, especially in Canada, as Canada moved to legalize and regulate recreational marijuana in October 2018.
For 2019 and 2020, it looks likely the US will be the region that moves forward on cannabis legalization. In the US, support for marijuana legalization this year hit an all-time high with nearly two-thirds of Americans favoring broad recreational legalization. Some other countries may also follow Canada's lead.
I can see the growth potential in the sector; however, in the past year, valuations looked a little ahead of earnings making the investment somewhat risky. Given valuations have come back somewhat, I am taking a second look.
The Alternative Harvest ETF (NYSEARCA:MJ) was the first marijuana-related ETF to trade in the United States. The fund tracks the performance of companies across the globe, including the US, that are engaged exclusively in legal activities of cannabis for medical or non-medical purposes.
The ETFMG Alternative Harvest ETF - Peaked in October 2018
Electric trucks, buses, trains, ships and planes + autonomous vehicles + smart cars
Within the electric vehicle boom the electrification trend now involves electric trucks, buses, trains, ships and planes.
The worldwide market for electric trucks is expected to grow at a CAGR of roughly 54.0% over the next five years. All types of electric trucks are already being made by BYD Co. [HK: 1211] (OTCPK:BYDDF) (OTCPK:BYDDY) in China. Tesla (TSLA) and Daimler (OTCPK:DDAIF) plan to soon release electric semis, and perhaps autonomous semis into the future. We may see a single semi (with human driver) followed by a fleet train of several other autonomous semis following just meters behind.
An electric delivery truck
World's first fully electric cargo ship
The articles below give a good review of the other electric vehicles. I am also writing an electric aircraft article that will be out soon.
- The EV Boom Just Keeps Getting Bigger - Update For The End Of 2018
- EV Metals Demand - The Calm Before The Storm
- The Electric Truck Boom Is About To Begin
- An Update On The Autonomous Vehicle Sector And On My AV Stock Picks
- Companies To Benefit From The Future Smart Car Boom
According to Statista, global eSports market revenue is forecast to reach US$1.79 billion in 2022, growing at a CAGR of 22.3%. The number of eSports enthusiasts worldwide was estimated at ~168 million in 2018, and for total global viewers, the forecast for 2019 is ~453 million.
eSports is the new hot sector, so I expect to be writing more on this topic soon.
Green energy (solar, wind, and others)
Solar and wind dominate growth within the green energy sector, along with the movement to energy storage (lithium-ion, vanadium, etc.).
Other areas of interest are abundant and worth watching. These include hydro, waste-to-energy, biomass, geothermal, tidal, hydrogen, etc.
I do follow the sector but traditionally it has been a tough sector due to massive competition from Chinese manufacturers of cheaper and cheaper solar panels. Wind turbines have less competition and a sector I have been following for some time, and may write on soon.
- A Look At The Vanadium Boom And Vanadium Miners
- Companies To Benefit From The Stationary Energy Storage Boom
Another area I am following is nanotech. By making particles smaller and increasing the surface area quantum advancements are being made in many areas such as increased solar absorption rates, higher energy storage rates, LED and display improvements, and medical applications (cancer detection, etc.).
I am researching a promising small nanotech company at the moment with plans for an article. And no, it's not Nano One [TSXV: NNO] (OTCPK:NNOMF). One I have followed that did very well in 2019 was GeneNews now StageZero Life Sciences [TSX: GEN] which I recently wrote on here.
Online (digital) banking (mobile banking) - eCommerce
The big new trend is online mobile banking. Tencent's (OTCPK:TCEHY) WePay and Alibaba's (BABA) AliPay have led the way. Globally there are now hundreds of fintech companies fighting for a slice of the mobile payments space. Early movers such as the traditional banks, PayPal Holdings Inc. (NASDAQ:PYPL), Visa (V) and Mastercard (MA) are still doing well, but are facing increased competition.
My view is that the global online giants with massive user bases will begin to take a larger market share and do very well.
One example could soon be Facebook (FB) who are moving into the fintech space by 2020, and given their ~2.5b users they are likely to quickly dominate the space (outside China).
- 'Calibra' Using The New 'Libra' Digital Currency Should Open Up A Huge New Revenue Source For Facebook
- Some Ways To Play The E-Commerce Boom
Online shopping grows bigger
The global online retail market is dominated by big names such as Amazon (AMZN), Alibaba, JD.com (JD), Rakuten, B2W Companhia Digital, Zalando, Flipkart (Walmart (WMT) now have a large stake) and eBay (EBAY).
The internet grows bigger
As shown in the chart below internet penetration has now reached 57% of the world. The growth rate may slow but the raw numbers will continue to rise fast. Social media and mobile dominate.
Alphabet (GOOG) (GOOGL) and Facebook dominate global online advertising. In China, Baidu (BIDU) and Tencent are the leaders. It still amazes me when I read that Facebook adds 500,000 new users every day. Also that "Facebook takes up 22% of the internet time Americans spend on mobile devices, compared with 11% on Google search and YouTube combined."
I have covered this in my article "Top 5 Tech Trends For 2019 where I discussed 5G, autonomous vehicles [AV's], artificial intelligence [AI], Internet of Things [IoTs], data storage and the cloud.
- A Look At Some Smaller Artificial Intelligence Stocks
- A Look At The Robotics Sector And Robot Companies
- Energy storage (Li-ion and vanadium are growing fast).
- IoTs (E.g.: Connected vehicles, Industry, office, home).
- Water shortages (China and India will need clean water perhaps from Nepal).
- Global infrastructure growth especially in Asia - Belt & Road, high speed trains, etc.
- The Global and Asian middle class rising.
- Ageing baby boomers - Healthcare, home care, aged care.
- Global debt - Should we buy gold?
- Social revolution and uprisings (war, military, weapons etc.).
- Long-term low interest rates in most western countries. Retirees search for yield.
- Global internet - Satellite suppliers, etc.
- Space tourism - Virgin Galactic to IPO perhaps late 2019.
- The clean meat sector - Meat grown from animal cells, or plant protein.
- 5 Mega Investment Trends To 2025 And The Main Players (EVs + ES, internet grows bigger, AI, 5G/IoTs/robotics, demographic changes (middle class, baby boomers).
- Top 5 Tech Stocks To Match My Top 5 Tech Trends For 2019.
- 10 Investing Trends to Watch in 2019.
- 6 Investing Trends That Could Dominate the Next Decade.
- A Look At The eSports Trend And The Main Companies Involved.
There are several new trends emerging globally that are worth following. Clearly, electrification of the transport sector, green energy, and the internet growing bigger dominate.
Within each of the above certain new opportunities are emerging such as electric buses/trucks/trains/ships/planes, energy storage and nano technologies, and many fintech trends (mobile banking, etc.).
Other new and growing trends include biodegradable plastics, the cannabis trend, and eSports. Added to this are the numerous tech trends that I have covered in the past 2 years.
Happy to hear from readers any newish trends they think offer great growth and investment opportunities.
As usual all comments are welcome.
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Disclosure: I am/we are long BABA, BIDU, BYD CO [HK:1211], FB, GOOG, TCEHY, TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.