No matter the size of your portfolio, just a handful of growth stocks could make you a fortune, even if the other stocks you have end up losing. The reason is simple: Growth stocks represent businesses that can consistently outperform industry averages in terms of revenue and earnings growth. Investors love these companies and are not afraid to pay a premium for owning stocks that could make them insanely rich.
The trick, though, is to identify companies with foolproof growth prospects, like the following three stocks, each of which has a megatrend that should only grow.
The future of energy is here
I have often recommended NextEra Energy (NYSE: NEE) as a great dividend growth stock, but that’s only because the company has huge growth prospects in a disruptive industry.
NextEra Energy began in 1925 as a traditional utility company, later called Florida Power & Light, but ventured into alternative energy as early as the 1990s. By 2009, NextEra had become the largest producer of solar and wind energy in the United States. Joined. That pioneering advantage in renewable energy, coupled with aggressive growth movements, has made NextEra Energy the largest wind and solar company in the world today.
Renewable energy is already the fastest growing source of energy, and the Center for Climate and Energy Solutions projects that renewables will generate 45% of the world’s electricity by 2040, up from just 26% in 2018. Not needed a lot to understand the type of growth ahead of NextEra Energy.
NextEra Energy is indeed a dream stock for both income and growth investors. NextEra’s adjusted earnings per share have achieved a compound annual growth rate (CAGR) of 8.7% since 2005, and the dividend per share has grown at a CAGR of 9.6% since then. Here’s how the action has gone in the middle.
With management targeting 6% to 8% growth in adjusted EPS through 2023 from a 2021 base and 10% annual dividend growth through “at least” 2022, and with the company’s aspiration to become into the “World’s Largest and Most Profitable Clean Energy Provider”. “In the long term, NextEra Energy is an obvious wealth-building stock for decades to come.
The sky is the limit for this industry
E-commerce is an indisputable megatrend and Shopify (NYSE: STORE) is only scratching the surface, having accounted for just 8.6% of US retail e-commerce.The company’s unique selling proposition (USP) is its platform that enables merchants of all sizes to easily create digital storefronts and manage the entire sales process. From entrepreneurs to larger brands, Shopify has something for everyone.
Over the years, Shopify has aggressively expanded its international presence; forged partnerships with big names, including Amazon.com (NASDAQ: AMZN), Facebook, PayPal Stock, Break, and Pinterest, to name a few; established multi-currency and multi-channel payment options, and launched its own logistics and financing branches.
Their efforts have been shown in their numbers: Shopify’s gross merchandise value skyrocketed from $ 15.4 billion in 2016 to $ 119.6 billion in 2020. Revenue increased more than sevenfold to nearly $ 3 billion in 2020 and they grew 86% last year.
Although 2020 was a banner year for e-commerce due to the COVID-19 pandemic, Shopify should continue to increase sales rapidly. That makes Shopify one of the best stocks to own in an industry with breakneck potential.
Healthcare has the potential to make a lot of money
Teladoc Health (New York Stock Exchange: TDOC) Stocks have bumped into each other in recent weeks, but growth stocks tend to swing. However, the fall in Teladoc shares has had a major catalyst: Amazon’s upcoming launch of its own telehealth service, Amazon Care.
Amazon’s financial clout, reach, and brand power make it a reasonable threat, but let’s not forget that Teladoc is already a global leader in the virtual care industry, with 14 million views across all of its channels in 2020.
Additionally, telemedicine is one of the few trends that will not go away after the COVID-19 pandemic. The industry was growing rapidly even before the coronavirus crisis: 76% of hospitals in the US already had a telehealth program in 2017, compared to just 35% in 2010, according to the American Hospital Association. . Industry experts project the market to grow in double digits in the coming years, with McKinsey & Company assessing the market to be worth $ 250 billion in the US alone.
Most importantly, this is a highly fragmented market that should offer Teladoc ample opportunities to expand and stay ahead. Advanced Medical in 2018, MedecinDirect in 2019, and Livongo Health in 2020 are just a few of the notable acquisitions Teladoc has made in recent years. The $ 18.5 billion acquisition of Livongo, in particular, could be a game changer as Teladoc expands control of chronic disease management.
After 98% growth in revenue in 2020, Teladoc projects 80% growth at the midpoint to 2021, with revenue reaching $ 2 billion at the upper end of its targeting range. That is still incredible growth and it could very well boost the stock price.
Ultimately, what matters is that telehealth, e-commerce, and renewables are massive megatrends, and each of these three stocks has huge addressable markets to exploit, which is why they all seem poised for such huge growth.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are variegated! Questioning an investment thesis, even one of our own, helps all of us think critically about investing and make decisions that help us be smarter, happier, and wealthier.