With global markets likely to undergo profound changes in coming years, investors have a range of megatrends to choose from for long-term wealth creation. From the green economy to space technology, here are four industries of the future for hidden upside.
Space industries could be a source of endless growth
Disruptive industries don’t come with much more growth potential than the commercialization of space. From Earth intelligence to satellite servicing, from space mining to space internet services, the opportunities to get rich from the “final frontier” are about as infinite as the cosmos itself.
The TSX has one obvious qualifying stock: Maxar. Maxar and NASA recently teamed up to develop Restore-L, a system that will refuel satellites while in orbit. As Maxar’s senior vice president of Strategic Growth Mike Edwards puts it: “The technologies proven on Restore-L are of great value to future exploration and science missions, and will play a crucial role in enabling our exploration of the Moon and beyond.”
Renewables will shake up energy investing
The world is seeing a greater push towards renewables on a global scale. The change in energy infrastructure means that investors with exposure to the green energy megatrend will likely see steep capital appreciation. Pipelines in particular are a political hot potato. For instance, over the border, Bernie Sanders has vowed to shut down the Keystone pipeline should he take power.
CN Rail’s CanaPux initiative is one of the strongest alternatives to pipelines in terms of draining the oil patch for investors seeking a lower-impact hydrocarbon play. For investors looking for an alternative to fossil fuel sources altogether, Northland Power offers exposure to wind, thermal, solar, and wave energy and pays a solid dividend that currently yields 4.67%.
Rising sea levels could reshape the real estate sector
In 2018, the Union of Concerned Scientists released a report titled “Underwater: Rising Seas, Chronic Floods, and the Implications for U.S. Coastal Real Estate.” In the report, the Union estimated that within the next 25 years, 300,000 properties in the U.S. will be impacted by flooding, unleashing a US$135 billion bill for damages and impacting 280,000 homeowners.
Relocation is likely to be big business, therefore, meaning that certain types of REIT could appreciate steeply in time. Ever the defensive play, apartment REITs could satisfy a portfolio geared towards new trends in real estate as well as stock holdings focused on passive income from well-covered dividends.
Alternative finance could shake up the Big Five
Active in the finance sector offering unsecured installment loans and merchandise leasing, goeasy is a less-obvious choice for banking investors, but a compelling one. Its business model is adaptable, lucrative, and could potentially survive a shakeup in banking from a ruptured housing market.
Loss of market share is perhaps one of the greatest threats to the Big Five outside of a housing market crash (which ultimately seems unlikely) and a complete market downturn. One source of such market share loss could come from alternative finance outfits such as goeasy.
The bottom line
Even if bankers such as goeasy fail to eat into Bay Street bankers’ bottom lines, their effect could see the battle lines between the Big Five redrawn over time. Growth investors looking for stratospheric gains in disruptive industries also have strong plays in the fields of space tech, green energy, and a long-term relocation trend in real estate.
