Growth stocks are back in fashion after the storming market rally of 2020/2021. This saw valuations rapidly rebound after the lockdown induces lows of early 2020, and value stocks were consistently outpaced by growth stocks. As such, right now savvy investors are asking themselves where the next generation of growth superstars will come from? As every long-term investor knows, you don’t have to be right every time you pick a potential growth stock – so long as you can pick a stock about to explode in value every few years you should see your net worth rise.
This means having an eye for which technologies will change markets in the near future, and being able to work out which firms are best placed to capitalise on these changes. For example, anyone who was early to realise that Nokia’s domination of the mobile phone market would be torpedoed by Apple and the arrival of the smartphone was sitting pretty for the next 10 years at least.
Staying power is essential! If you believe a company is going to make it big, you have to be willing to wait sometimes. Not every new idea will be successful immediately. Again, Apple is a key example, having spent its first few decades as an irrelevant small company.
Which companies today have the potential to reach a $1 trillion valuation by 2035? Here are 5 companies we feel have something special which could propel them all the way to the $1 trillion mark.
5 Stocks That Could Be Worth $1 Trillion by 2035
Intermediate Capital is a UK asset manager focused on private debt and credit markets. So far in 2021 the group has posted an impressive 19% boost to assets under management, as well as announcing record profits in both its fund management and investment divisions.
Why do we think Intermediate Capital might have what it takes to make it into the $1 trillion club? Well, the asset management sector, in general, is set to have many good years ahead.
The ultra-low interest rates seen in all major markets over many years now have pushed more and more savers out of cash saving accounts and into more risky assets.
This has meant recording demand for the services of asset managers like Intermediate Capital. These macro trends seem set to continue, and if Intermediate Capital can keep up its impressive growth rates then the sky is the limit. The stock also offers an attractive dividend yield of 2.6% to add another sweetener.
In short, the whole industry is set to grow, and there is ample room for newer entrants like Intermediate Capital to grab a slice of this growing market for years to come.
Zoom Video Communications
Few companies have had a better 12 months than Zoom.
The lockdown shot the company straight from obscurity into the centre of commercial and social life all around the world. Their simple to use video calling app revolutionised how people work and socialise, and we are willing to gamble that this transformation will have an impact beyond the pandemic.
In many sectors the 9-5 office job is becoming extinct, will flexible working from home facilitated by apps like Zoom rapidly becoming the norm.
Zoom’s share price increased a staggering 500% over 2020, and although it is now down from that high, there is a very real change Zoom will join the elite club of massive US tech companies who are able to go from strength to strength to strength. Zoom could well be the next Google.
Etsy is an e-commerce company best known for the lifestyle and homeware products it sells.
Last year Etsy enjoyed revenue growth of 141.5% and has very favourable forecasts for 2021 from most analysts. Essentially, where Ikea led, Etsy is now following, but with more emphasise on hand-make and arts-and-crafts style products for the home.
This works well for Etsy, as it means they have been able to access higher pricing levels than some of their mass-market competitors.
Etsy could also be said to have benefited from the lockdown disruption in the sense that people are now more willing to invest in making their home a pleasant environment, as we all spend so much more time there these days.
Etsy is backed by a very sophisticated and comprehensive marketing drive and is currently aiming to build market share in Europe and Japan. If Etsy can succeed in other developed markets as well as it has in the US, then this is one retailer with a very bright future head.
Kainos is a Belfast-based software group specialising in developing bespoke software for healthcare companies and providers.
As such, the global market Kainos can potentially access is vast and filled with governments and pharmaceutical companies willing and able to spend big.
Kainos saw its operating profit double last year off the back of increased demand for it’s services during the pandemic. However, we are speculating that this won’t be a temporary boost, but more the start of a long-run trend.
Higher spending by governments around the world on healthcare, and a desire to maximise what they get for their spend, will mean software and systems providers like Kainos can expect a full order book for the foreseeable future.
Finally, a housebuilder well set to take advantage of the need for more affordable housing in the UK over the coming decades.
Bellway have a diverse portfolio of housing projects ranging from luxury developments in central London to affordable estates outside the major cities.
This diversity is a strength that sets them apart from other large housing developers who tend to specialise at either end of the spectrum exclusively.
Basically, the UK like most other developed economies, need to build vastly more houses than have been delivered over recent decades to keep up with rising demand.
There are only a handful of firms with the capacity to deliver projects at scale, and so Bellway is set to hoover up lucrative house building contracts in the coming years.
Analysts are very optimistic about their growth and revenue projections, and the share has seen an absolute return of 24.9% over the past year. Many think the best is yet to come from this stock!
5 Stocks That Could Be Worth $1 Trillion by 2035
These five stocks all have the potential to grow their market cap from where they are now to $10 over the coming years. They all have some sort of USP that sets them apart from their competitors, as well as strong earnings data behind them.
Whilst nothing is certain, these 5 stocks look like they could add growth and upside potential to many portfolios. Alongside more stable, dividend-yielding stocks, these would be good bets to grow rapidly over the next 10 years.
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