The secret word for next decade is alternative. From the U.S. election to Brexit, from energy to the way we eat, the major theme at the start of the new decade is going to be profound, far-reaching change. While this will bring a lot of uncertainty, as some of the biggest aspects of the economy undergo a seismic shift, it will also generate huge momentum potential, and the possibility to cash in on rocketing upside.
Cash cows of the 2020s
While low-carbon industries are gaining recognition for growth potential, one thing that investors may not be aware of is that the green economy was instrumental in the economic recovery that followed the 2008 financial crisis. One recent estimate put the green economy at 7% of the GDP of the U.S., supporting more than 4% of all workers there.
Cutting emissions is certainly big business and is a major driver of the green economy. Look at some of the world’s largest oil stocks: taken together, some of the biggest producers have pumped around US$1 billion into climate branding and related activities since the signing of the Paris Agreement.
Staying with the green theme for upside from electric vehicles (EV), Canadians could add Magna International to a potential growth stock portfolio. Already a major North American auto parts player, the company made a landmark deal with Beijing Electric Vehicle Company that gives Canadian investors to the EV market in China.
The streaming wars also offer opportunities for profit in 2020, with the battle between Netflix and rival pretenders to the streaming crown heating up. Disney has been angling to dominate the streaming space and has seen strong early take-on for its platform Disney+. It’s had a huge year, with blockbuster after blockbuster pouring revenue into the media giant’s coffers.
With a lower subscription fee than Netflix, Disney’s streaming revenue may be an issue, though. There will also be tough competition from other cheap streaming options, meaning that Disney may find it difficult to raise its subscription fee. 2020 could see the studio’s dominance begin to waver against the growing industry influence of Netflix.
Put money aside for leftfield investments
Investors should set aside money for unexpected growth opportunities. With sea changes in energy, entertainment, and food production, disruption could abound in every sector in the next decade. Alternative protein is likely to become a major growth trend as meat-free options go mainstream. Alternative finance could also see some market share loss for the biggest high street bankers, including the revered Big Five lenders.
The space industry is also a potentially game-changing investment theme for the new decade, with early investment opportunities in Virgin Galactic, the first ever pure play on space tourism, and Maxar Technologies with its access to NASA’s rebooted manned Moon exploration program and the satellite maintenance industry.
The bottom line
Momentum can be unpredictable, and with the amount of market-shaking change facing the investment landscape next year comes great risk for growth investors. However, by sticking with the big players, some key developing trends could reward shareholders with masses of upside.
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Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Netflix and Walt Disney. Tom Gardner owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool owns shares of Virgin Galactic Holdings Inc. The Motley Fool recommends Magna Int’l and MAXAR TECHNOLOGIES LTD and recommends the following options: long January 2021 $60 calls on Walt Disney and short January 2020 $130 calls on Walt Disney.