A new year offers new opportunities for the investment community. After one of the most volatile years in the history of the stock market, investors are looking forward to the young bull market stretching its legs in 2021.
Although a collapse or correction of the stock market is always possible, there are enough backwinds that suggest that stocks may rise higher. The lending rate should stay at or near historical lows within the foreseeable future, which will encourage growth stocks to borrow. This extra cash can be used to hire, innovate and acquire other businesses.
As we are ready to say goodbye to 2020, here are four strong growth trends for 2021.
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Precision medicine
We learned a lot in 2020 about where the future of healthcare is headed. There is little demand that you want to invest in precision medicine. With precision medicine, I am talking about drugs, devices and services designed to personalize a previously one-time treatment process.
A good example is the giant for telemedicine Teladoc Health (NYSE: TDOC), which has more than tripled virtual visits from the previous year in each of the past two quarters. Teladoc fully understands that virtual visits are more comfortable for patients and doctors. It is also usually cheaper for health insurers than office visits. With the addition of the fast-growing applied healthcare company Livongo Health, Teladoc is at the forefront of personalizing treatment.
Investors can also be a leader in medical devices such as DexCom (NASDAQ: DXCM). DexCom manufactures and sells continuous glucose monitoring (CGM) systems that help diabetics monitor their blood sugar levels. DexCom’s CGMs can also be used to provide immediate data to physicians. Since there are 34.2 million people with diabetes in the US, and another 88 million with prediabetes, DexCom should stay busy.
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Cloud infrastructure
Before the coronavirus disease (COVID-19) in 2019 (pandemic), large and small businesses gradually developed online offerings and shared more and more data via the cloud. The pandemic simply accelerated this trend and highlighted the importance of infrastructure in the cloud building block.
One of the more obvious key players in cloud infrastructure is the giant of e-commerce Amazon (NASDAQ: AMZN). Retail accounts for the bulk of Amazon’s total sales, but the bulk of its operating revenue comes from the Amazon Web Services (AWS) cloud infrastructure platform. AWS currently has an annual sales price of $ 46 billion. It should be responsible for tripling Amazon’s cash flow over the next four years.
Do not miss Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), óf. Ad placement on Google, its Internet search platform, is Alphabet’s leading growth operator. Still, Google Cloud is the fastest growing segment, with 45% growth in the third quarter of 2020. Cloud has an annual sales price of $ 14 billion. Alphabet’s deep pockets and Google’s brand should be more than enough to give Amazon a chance.
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American cannabis
Growth seekers will also be wise to invest their money in U.S. marijuana stocks in 2021. The USA is the largest marijuana market in the world. 2021 looks like it’s the year that will push vertically integrated multistate operators (MSOs) into repeat profitability. Additional state-level legalizations could further boost industry sentiment.
Green Thumb Industries (OTC: GTBIF) is one MSO that wants to go green for good. The company generates about two thirds of its revenue from derivatives (ie edible beverages, beverages, fumes, topical products and concentrates). These derivatives boast significantly higher margins than dried cannabis flower, which will help Green Thumb beat some of its peers to the profit column. Green Thumb currently has 50 operating pharmacies, but has enough licenses to open 96 total stores in a dozen states.
Cresco Labs (OTC: CRLBF) should also be on track for a banner year. Nearly half of the 19 public pharmacies are in the restricted license state of Illinois. The Land of Lincoln opened its doors for sales of recreational pots on January 1, 2020 and looks set to move north of $ 1 billion in annual sales by 2024.
Furthermore, Cresco has a large wholesaler in California that offers him access to more than 575 pharmacies. California is the largest marijuana market in the world through annual sales.
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Companion animals
A fourth and final high growth trend that investors should be everywhere is pet ownership. According to the American Pet Products Association, nearly 85 million households today own a pet, with $ 99 billion expected to be spent on pet animals by 2020. In the last quarter-century, U.S. pet spending has by no means declined year on year.
Pet insurer Trupanion (NASDAQ: TRUP) is one of the biggest opportunities in its industry. Trupanion has been building a relationship with veterinarians on a clinical level for two decades, offering it an invaluable advantage over other competitors entering the pet insurance space. At present, only 1% of U.S. pet owners have health insurance for their furry family member. Ongoing training for clinic-level pet owners should help significantly increase these penetration rates in the years to come.
Freshpet (NASDAQ: FRPT) is another fast growing company in the companion pet space. Just like groceries that linked the organic and natural growth phase of the 2000s, Freshpet understands that pet owners will pay for higher quality pets and pets. Freshpet is still in its infancy, but has already found its way to more than 22,000 retail doors. A sustainable double-digit growth opportunity lies ahead.