The Motley Fool

3 Stocks Riding Massive Secular Trends

stock research, analyze data
Image source: Getty Images

Investors wanting to achieve maximum gains should focus on growth stocks that have support from secular trends. Think of Apple during the rise of smartphones, Amazon during the early days of the internet, and Tesla before electric vehicles really became mainstream. Investors that got into those companies early have seen massive returns. In this article, I’ll discuss three top stocks that are riding massive secular trends. These companies could produce outstanding returns from here.

The retail landscape is rapidly changing

Since 2000, and the rise of the internet, online retail has slowly been adopted by consumers. By the start of the 2020s, e-commerce had successfully penetrated most of western society. However, it still only represented a small proportion of all retail sales in some countries, Canada included. Then in mid-2020, when the COVID-19 pandemic ripped across the world, e-commerce saw a massive increase in adoption. This was mostly a result of governments around the world imposing business lockdowns.

One company that has really benefitted from the shift towards online retail is Shopify (TSX:SHOP)(NYSE:SHOP). The company provides merchants with a platform and all the tools necessary to operate online stores. Although it originally targeted smaller businesses, Shopify now has the capability to serve large-cap companies like Pepsi and Netflix. Shopify stock has already produced massive returns since its IPO, but it could still be at the very beginning of its growth story.

Digital payments are becoming more common

Going hand in hand with e-commerce, digital payments have gradually been penetrating many markets around the world over the past decade. Nuvei (TSX:NVEI) is a major player in the industry and the most intriguing pureplay payments company in Canada. It offers an omnichannel payments processing platform to businesses. Nuvei is currently present in more than 200 global markets, accepts 470 payment methods, 150 currencies, and 40 cryptocurrencies.

Nuvei made waves on its first day of trading when it closed the largest tech IPO in Canadian history. Despite having gained more than 122% since its IPO, the stock is still only valued at $15 billion. While that’s not a very small company, it is small compared to its peers. With the continued prevalence of digital payments, it could be safe to assume that Nuvei has a chance to be much bigger by 2030.

This will power our society moving forward

The final secular trend that investors should keep in mind is the shift towards renewable energy. Within this large umbrella of renewable tech, investors have many different routes they can explore. As mentioned previously, you have companies like Tesla pushing electric vehicles to new frontiers along with many other companies exploring things like hydrogen fuel cells and so on. However, I think one of the most intriguing industries within the broad renewables landscape is the renewable utility market.

Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) is a global leader in this industry. The company operates a diversified portfolio of assets capable of producing 21,000 MW of power. Although this portfolio has been very concentrated towards hydroelectric power, previously, Brookfield Renewable has done an excellent job of diversifying into other energy generation methods in recent years. As countries around the world continue to embrace renewables, expect Brookfield Renewable to be a major player.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jed Lloren owns shares of Apple, Brookfield Renewable Partners, Shopify, and Tesla. The Motley Fool owns shares of and recommends Apple, Shopify, and Netflix and recommends the following options: long January 2023 $1140 calls on Shopify and short January 2023 $1160 calls on Shopify.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.