While the general mood in the market is one of recovery and growth, not every sector is on the same page. Some, like energy, are finishing their growth sprint and entering the normalization phase, which might turn into a slide down if some external factors are triggered.
Real estate, on the other hand, is still maintaining its momentum, but once the housing bubble starts to shrink at a considerable pace, the effect will reflect in the real estate sector as well.
The same goes for individual stocks. Many stocks are running out of the “optimism” fuel that propelled their growth, while others are just beginning their ascent.
A venture capital stock
Thanks to the rise of green energy and electric vehicles, Lithium, a core component of the batteries has been in demand for a while. And this has caused lithium-related stocks like Standard Lithium (TSXV:SLL) to have spiked in valuation. The share price grew by over 430% in the last 12 months. It has been one of the best bull runs for the stock for a while now, and it’s still not running out of momentum.
It also means that the stock is currently aggressively overvalued. But if the demand for lithium keeps rising up at a steady pace, the company might stay profitable. The company processes five billion gallons of brine a year to extract lithium.
It controls the largest reported lithium brine resource in the U.S, so there is no shortage of raw material, and the company’s prospects are tied to the demand. The process of refining brine for Lithium instead of mining the hard rock is significantly easier.
A real estate company
If you are looking for a bit more consistent and long-term growth, one real estate stock that you might consider investing in is Colliers International Group (TSX:CIGI). The stock has returned over 191% in the last five years. Colliers is an investment management and professional services company that caters specifically to the real estate market in 66 countries around the globe.
It has $42 billion worth of assets under management and works with 15,000 professionals. The company has an impressive revenue growth record stretching back 16 years (15% compound annual growth rate) and a 21% compound annual growth rate for AEBITDA growth for the same period. Most of the company’s revenue is generated in the Americas.
CIGI is a powerful growth stock with a history of capital appreciation going back about two decades. Therefore, it’s hardly surprising that this growth comes with a very high price tag.
Both stocks are poised to continue growing for some time yet. They might eventually run out of momentum due to external factors. Standard lithium can become a victim to a shortage in lithium demand, while CIGI might suffer a slight blow if the housing bubble pops in Canada. But the long-term growth prospects of the two stocks look promising.