Space, green energy, and China – these are the terms that are associated with today’s investments among major players in the world’s largest exchanges. Indeed, investors’ interests can often change wildly – a fact noticed not only by exchange market managers but by the majority of the forecasts as well. So, let’s take a closer look at the aforementioned sectors!
An experienced investor can always see a clear sign of a shift in today’s market priorities. The past year has once again confirmed the immutable truth: a crisis is a time of opportunity.
When some turn out to be strangers to the market, the value of others grows rapidly. Thus, the massive rise in the remote working and learning format led to the steep rise of tech companies such as Apple, Google (Alphabet), Microsoft, and Facebook
The era of low rates, which can already be clearly noticed, makes it possible to invest “for the long term”. By the way, the space industry naturally presupposes long-term investments.
It is also clear that the events the world is experiencing right now has made some adjustments to consumer preferences. For example, it brought environmental issues to the front line and with the economic recovery in full swing, oil prices are on the rise again. This, in turn, stimulates the investor’s interest in alternative energy sources.
It is likely that throughout the normalization of the usual economic turnover, we will be able to observe the return to the market of traditional industries such as manufacturing, metallurgy, transport, aviation, tourism, and entertainment soon. But first things first!
Technological Longevity
Continuing the theme of long-term projects, it is worth betting on the growth of technology companies such as Apple, Microsoft, Amazon, Facebook, Alphabet, Tesla, and NVIDIA. This is what the current top looks like in terms of the index’s largest companies and accounts for 56.23% of its capital.
Although we cannot answer which technology sector companies will continue the race in 2021-2022, being part of the NASDAQ 100 exchange-traded fund will allow you to be “in the know” without giving clear preferences to one company or another. Since the beginning of the year, Invesco QQQ Trust has grown by nearly 40%. This game is definitely worth the candle!
Investments in the Moon
This year it is also worth paying attention to space technology. Private companies are already actively developing technologies for manned lunar landings and are launching nanosatellites into orbit from aircraft, which reduces the cost of launch. This is all happening right now!
The demand for nanosatellites and reusable launch vehicle systems is expected to grow at an incredible pace. Thus, in the next 5-10 years, the satellite market may become one of the greatest categories for investment.
Here it is worth paying special attention to the procurement of systems by countries in the Asia-Pacific region, North America, and Europe. However, the fastest-growing market from 2024 onwards will be China, as the Chinese government continues to invest billions of dollars into this industry.
At the moment, the total market volume of the global space industry is about US $400 billion, and is expected to grow to US $1.4 trillion by 2030!
Eco-investment
Green energy is also actively developing. The generated volumes of renewable energy sources and their market share have been steadily growing over the past few decades – this is simply a fact. The reasons for this growth are both the climate agenda and the reduction in the cost to produce such electricity. Interestingly, along with the growth in the generation of renewable energy sources, global energy consumption also continues to steadily grow.
At the same time, opponents of alternative energy sources continue to talk about the inefficiency of transmission said energy, the instability of obtaining it, and the disposal costs of wind turbines and solar panels. However, the list of arguments for the development of green energy grows every month! There are already heated debates about whether alternative energy will be able to replace traditional ones. Moreover, this sector is supported at the state level in many countries.
According to analysts’ forecasts, green energy will become the largest energy sector in terms of investments as soon as 2025-2030. Currently, investment leaders within the industry continue to be solar and wind energy (moreover, solar has been overtaking wind investment since 2010).
Therefore, the most relevant stock right now seems to be energy companies that are engaged in the generation of solar and wind energy and electric vehicle manufacturers. The future is already here!
Dark Horses
The current anonymous competitor to growth stocks is value stocks. Often, such companies are significantly underestimated due to external factors rather than any real financial indicators. Therefore, they are cheaper to buy on the market than their counterparts. However, finding such stocks can be a difficult task.
It was thanks to cunning and accurate strategies for finding such companies that the legendary investor Warren Buffett built his financial empire.
In the near future, we advise taking a closer look at the shares of the following value companies: Exxon Mobil, BP, Total, Procter & Gamble, BMW, Daimler, and General Motors. Companies from emerging economies with short and medium duration can also be added to this list and include the Mexican leasing company Unifin and the Mexican oil and gas company Pemex.
Masked Players
As companies testing coronavirus vaccines continue to report their successes, the pharmaceutical sector is becoming increasingly attractive to investors.
Naturally, we could not pass by potential assets from the aforementioned Warren Buffett’s list of top prospects. This list opens with the companies Merck & Co, Inc. (MRK) and Pfizer Inc. (PFE). Firstly, both companies can be attributed to value stocks, because they are completely undervalued, and were not among the first positions of growth in 2020. Accordingly, their shares fell 11.2% and 1.7%, respectively. At the end of October 2020, the company reported a significant increase in net profit for the third quarter, by 55%, to US $2.94 billion, or US $1.16 per share, as compared to US $1.9 billion and US $0.74, respectively, a year earlier. Therefore, Pfizer should be expected to benefit from both clinical trials of its coronavirus vaccines and a rebound in sales of other drugs from its portfolio. The growth potential of these companies is estimated to be at 10-20%.
For a savvy investor, it is very important to note that we are talking about two global pharmaceutical “monsters” – the capitalization of each of which exceeds US $200 billion! Additionally, no one will be left indifferent by the fact that both Pfizer and Merck presently pay very hefty dividends. For the former, they clock in are 4.14% per year, for the latter, 3.23%.
In summary, it is worth noting that after the 10th anniversary of the bullish market, along with growth stocks, it is reasonable to have some protective assets in your portfolio, which are almost always on the rise.
Many prominent investors differ from each other in their investment style, but they do have one thing in common – the desire to get the most out of their investments with certain restrictions on risk. A private investor should perceive all this information solely from the point of view of his or her individual goals, which can be solved with the help of his or her personal investment portfolio.
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It is most likely that in 2021-2022 a certain “revolution” awaits us and the shares that were in the shadows during the pandemic will come to the forefront of the market.