It’s time to buy growth stocks. These businesses have crushed the overall market for more than a decade.
When most people think of growth, they think of tech. But plenty of other industries are capable of doubling, tripling, or even quadrupling your money. The stock picks below have already proven that ability.
If you want to add some growth to your portfolio, Brookfield Infrastructure Partners (TSX: BIP.UN)(NYSE: BIP) and Kirkland Lake Gold (TSX:KL)(NYSE:KL) are your best bets.
Bet on rising populations
If only you could make money on anything. Then I’d bet that ocean waves keep crashing, the sun keeps shining, and the sky remains blue. Of course, you can’t turn a profit on these predictions. But there is one fact of life that you can capitalize on: population growth.
For years, global populations have been rising. Lately, it’s been happening at an increasing speed.
It took since the dawn of time for the world’s population to reach one billion in 1804. Now, we’re adding 80 million people every year. By 2100, the United Nations thinks we’ll have more than 10 billion people on earth.
But how can you bet on this? Own growth stocks that own assets that directly benefit. Brookfield Infrastructure is a prime example.
Brookfield owns assets like ports, highways, cell towers, and pipelines. The more people a region has, the more demand there will be for these assets. It’s as simple as that. Over the past decade, shares have risen nearly 400%, versus a 35% rise for the S&P/TSX Composite Index.
All the company needs to do is repeat its proven strategy again and again. That’s possible due to a capital-recycling program, which monetizes assets when prices are high, while deploying capital when prices are low. This active management is a big reason for this growth stock’s success.
If you want to buy and hold a stock for decades at a time, I can’t think of a better contender than Brookfield Infrastructure.
This growth stock is special
Kirkland Lake isn’t typically considered a growth company. But just look at its track record. Over the past five years, shares have risen 30 times in value. A $5,000 investment in 2015 would now be worth $150,000.
What’s the secret? It’s capital discipline — something most mining companies have failed to achieve for nearly 100 years.
Gold mining is often a volatile industry, full of boom and bust cycles. But much of this is self-inflicted.
“Let’s say a proposed project has a breakeven price of $1,700 per ounce,” I recently wrote. “When prevailing prices are $1,500 per ounce, this mine likely won’t be developed. But when prices surge to $2,000 per ounce, suddenly the project becomes economically viable.”
“The problem occurs when gold prices revert lower,” I explained. “These high-cost projects quickly become unprofitable. Several gold miners have gone bankrupt in this exact scenario.”
But Kirkland has avoided those issues by solely focusing on low-cast assets. Its breakeven price is close to $500 per ounce. Gold would need to lose 70% of its value for the business to lose money.
This is what makes Kirkland such a reliable growth stock. Its cost discipline gives it plenty of cash to continually invest no matter where gold prices head.
With economic uncertainty near an all-time high, now is the time to own risk-mitigated gold stocks. Kirkland is a best-in-class choice.
