The markets are in flux, but that doesn’t mean that investors should forget about growth. Let’s review three strong contenders for disruptive upside.
The alt-meat boom
Food is a defensive play and consumer staples belong in every long-term portfolio. But let’s drill down into the case for alt-meat investment for a moment here. As Bill Gates said a couple of years ago, “If all the cattle in the world joined together to start their own country, they would be the third-largest emitter of greenhouse gases.”
Ethics aside, no investment is financially sound in the long term if its operations are unsustainable. On the flip side, meatless proteins are gathering momentum. Names like Beyond Meat and Impossible Foods are carving up the alt-meat market.
Restaurant Brands is a buy for its meatless product exposure and high growth potential during a full pandemic market recovery. Restaurant Brands hasn’t suffered as hard as independent restaurants have, benefiting from its fast-food outlet model and protected by sheer strength of numbers. While that’s not good for indie food joints, Restaurant Brands’s unassailable business model has helped shield investors from destructive market forces.
The digital revolution
The growth of the digital sector is another major growth investment theme. Supply chain automation has seen names like Descartes and Kinaxis gather momentum this month. Shopify taps into e-commerce growth, meanwhile, and offers long-term capital appreciation backed up with a widening economic moat. This leading Canadian business also just saw a great quarter, scoring 47% year-on-year revenue growth.
Shopify is also leaning heavily into the digital aspect of its own workplace. Thursday saw CEO Tobi Lutke tweet, “As of today, Shopify is a digital by default company. We will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely. Office centricity is over.”
Infrastructure stocks are a hot play
Infrastructure stocks are likely to continue to attract interest as Canada inches towards re-opening. Projects like Ontario’s proposed widening of the 401 hint at structural regeneration, with a focus on bolstering construction industry. Meanwhile, Google’s Sidewalk Lab’s abandoned “smart city” project in Toronto has created a void into which other developers are likely to rush.
Names to watch in this space include Finning International and Badger Daylighting. The market rally is likely to be ripe with upside. Names like Badger Daylighting are likely to appreciate in value as bullish investors pile into infrastructure. Meanwhile, GFL Environmental is the next big thing in infrastructure investing and still attractively valued.
GFL is still a stock in flux. But it’s off to a promising start, with investors pushing the name up 12% in the last four weeks. It packs sizeable market share and growth potential with the defensive qualities of an essential industry. While it’s early days in terms of valuation, its P/B of 1.2 times is indicative of a fairly priced stock. Its nominal dividend also hints at payment increases, adding to a long-term growth thesis.
