Future Hot Stocks: where the smart money is going

Thus far, through 2017 and as we head into 2018, markets have been in a bull run for nearly nine years. However, it’s not time to lose focus. There are many options to consider as trends and hot tips make the rounds. The pick includes some stalwarts who will still dominate in 2018, but also new choices that may prove valuable while appearing offbeat and somewhat tempestuous.

Old school

Some stocks from technologies not yet fully tested – such as robots and self-driving cars – are considered speculative and risky. Trends take time to run their course, and ideas take time to mature. However, for the risk-adverse, there are still future picks that are strong on track record.

Berkshire Hathaway: Still a favoured choice among investors of all ages. While there’s a worry that Warren Buffett may soon step aside, there is no likelihood of stock spiralling. Berkshire Hathaway owns hundreds of businesses; if for any reason the company was to be broken up, and provided this was done in a prudent manner over an extended period, Berkshire Hathaway investors would most certainly benefit from the process. Berkshire Hathaway operates like a quasi-mutual fund with a diversified group of holdings and no management fees, and therefore it stands as one of the best ‘buy-and-hold’ (Buffett’s own well-tested philosophy) investments around.

Apple / Microsoft: The tech giants will continue to innovate in a changing and demanding world. There’s no doubt that Apple will continue to create products people want to buy, and certainly continue to reward shareholders for their patience and loyalty. Rumours that Apple and Walt Disney may be joining to form a media and tech conglomerate are worth notice. The combination would provide the imaginative Apple with some interesting avenues to generate ideas for new products. And imagine where that may go…

General Electric: GE has surprisingly outperformed the rest of its market in the early days of 2018 – and this may be just the beginning of a more sustained upside move in the months ahead. This is a good time to build a starter position in shares. With new CEO Jon Flannery showing a tough strategic mind, this could be the start of a bullish track that few had expected of this major company. With new focus, the iconic giant has the potential to rebound significantly, and presents solid potential for 2018.

Pharmaceuticals/biotechnology: A well-diversified portfolio should not neglect this sector. The baby-boomers are reaching the age where the sale of healthcare products will expand globally. In addition, there are ever-new methods of fighting disease and pain. Even your plant-based industries see sound growth for the future. Successful new products, such as Heron’s Therapeutics new treatment for cancer and pain, HTX-011, is being well-received. It has the advantage of targeting both pain and inflammation post-surgery, setting it up to become the best-in-class therapy for post-operative pain management. Providing sustained relief for the first 72 hours, it reduces the need for highly-addictive opioids. It’s this kind of advance in medical care that will draw the smart money in 2018 and beyond.

Facebook: With over 2 billion users, FB still fuels rapid sales and earnings growth. Despite the naysayers, the upward trend does not seem to be diminishing, and is expected to grow 33% in 2018.

Ryanair: The airline has taken its recent problems in its stride, and is expected to continue improving through to 2019 as the customer base expands beyond 129 million. While three main competitors have gone insolvent in 2017, Ryanair’s cost advantages give it a powerful competitive edge, and it’s seen as one of the best stocks to buy for 2018.

The new potential

Green energy: While global exploration for fossil fuel continues, its prime investment position is diminishing slightly. And renewable energy is growing at a pace. Invariably, when given the choice, people prefer the source that is not detrimental to the environment. Therefore growth in this area is set to develop exponentially – from research and innovation to application of new systems and effective changes in lifestyle everywhere. Electric cars are just one example of changes that will take place ever more rapidly over the next ten years. Electric cars are here to stay – just one green energy arena where the smart money is moving.

Marijuana: This one might make you blink, but the legalisation of marijuana is moving ahead and appears to have the potential to make millionaires out of early investors. This is not a speculative penny stock issue, either – there are several reputable companies putting their faith on the line for this investment, with the scale and regulatory know-how to dominate the market. With the rise in the popularity of plant cures, this one stands to peak in 2018.

Online travel: With the advent of cheaper airflights, and disrupters such as Airbnb, investing in companies with innovation in this industry is sound thinking. Travel is hugely popular across the globe, and figures are growing every year. Expedia in particular, the name behind multiple websites, including Trivago and HomeAway, is set to drive development in the travel industry across its core set of assets. Recent investments include London’s SilverRail Technologies and Indonesia’s Traveloka. Its international footprint is set to grow significantly, putting stocks on the upswing for 2018.

Home entertainment: The growth of Netflix reflects the trend to stay home and be entertained by good movies, series and sit-coms. It suggests that people have finally been allowed to choose for themselves – and they’re prepared to pay for that choice. This means a steady income over each year, with a substantially expanding subscriber list. The entertainment industry in general is showing continual growth as people have more leisure time and money to spend.

Online shopping giants: Chinese e-commerce giant Alibaba, has soared by 80% since the beginning of 2017, benefiting from the rapid increase in the Chinese middle and upper-middle classes. Calculations predict spending doubling from $1.5 trillion in 2012 to nearly $4 trillion in 2018. So the stock has noteworthy growth potential. Amazon has many interests, including a very profitable cloud business that generates almost $1 billion in annual operating income. Amazon Prime holds steady at more than a 100 million subscribers at $99 per year. Over and above this revenue, is the amount each subscriber spends on products. Nearly 76% of members spend more than they did before paying the annual fee. Amazon’s constant investment in new growth areas is a strategy that shows promise for continued success over time.

A steady hand on the helm

There will always be new opportunities as consumer demands change and innovation altars the investment landscape. What is important is careful investigation and a watchful eye on a diversified portfolio. No matter how excited we may be at new developments and the possibility of good gains by being the first foot in the door, caution is always advised.

At Foster Wealth we prefer to review a fair track record before we consider advice. Trust and good judgement are equal in value to the potential that lies in fresh sectors and flyaway stocks. It’s our job to help you take time to pick the gems from the sparkly glass.

Find us at: www.fosterwealth.co.za

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