Now it’s hard to know where to invest. Stock markets have been sluggish all year and 2023 doesn’t look all that good either. There are serious concerns that the Federal Reserve will push interest rates too high, triggering a sharp recession.
However, once all this uncertainty is overcome, we see several long-term growth trends that will remain strong for years to come. The three biggest megatrends are:
- Decarbonization: The economy is moving to low-carbon energy sources.
- digitalization: Companies are undertaking digital transformation initiatives to bring more business processes online.
- deglobalization: Countries are shifting supply chains onshore to improve resilience.
As such, companies looking to capitalize on these themes should thrive in the years to come. So the best place to invest $5,000 (or any other amount) is across these megatrends. Here are five of his companies that are tailoring their operations to capitalize on one or more of these themes.
Data Infrastructure Leader
american tower (AMT 0.88%) is one of the world’s largest real estate investment trusts (REITs). The company operates 222,000 telecom sites worldwide and over 20 US data centers.
This infrastructure is essential for accelerating digitization.Increased data usage from 5G, streaming, cloud computing, and other digitization trends are increasing the need for more mobile communications infrastructure and data centers. According to one estimate, he will need to invest $1 trillion over the next five years to upgrade his global data infrastructure.
This will allow American Tower to continue adding tenants to existing towers and data centers, developing new sites, and acquiring locations. These drivers will enable REITs to continue to grow cash flows and dividends at above-average rates over the next few years.
Infrastructure investors in megatrends
brookfield infrastructure (BIPC -0.07%) (BIP 1.20%) is a global infrastructure investor with operations in the utilities, midstream energy, transportation and data sectors. The company is increasingly focused on investments aligned with the trends of digitization, decarbonization and deglobalization.
Brookfield builds a leading data infrastructure portfolio with towers, fiber optic networks and data centers.It also takes advantage of deglobalization by backing the semiconductor giant intel Domestic manufacturing capacity by financing two new plants in the United States
On top of that, we are investing in several decarbonization initiatives. The company expects these themes to drive organic growth at or above the upper end of its annual target range of 6% to 9% over the next few years. This should result in annual dividend growth of between 5% and 9%.
Secure Digital Transformation
Palo Alto Networks (PANW -1.31%) is the global leader in cyber securityAs more companies digitize their businesses and hybrid work becomes the norm, network security becomes increasingly important.
Meanwhile, cyber threats are becoming more complex and costly. According to Cyber security Ventures, the cost of global cybercrime will balloon from $3 trillion in 2015 to $10.5 trillion annually by 2025. Palo Alto Network built his three platform strategy to help clients secure their digital transformation. This allows the company to capture market share as customers integrate their network security with best-in-class features from the company’s unified platform.
A leader in logistics real estate
prologue (PLD 0.31%) is a global leader in logistics real estate, with 1 billion square feet of space in 19 countries. Demand for warehouse space has skyrocketed since the pandemic. This is due to accelerated adoption of e-commerce and changes in inventory management practices that have made supply chains more resilient.
These digitization and globalization forces are driving REITs to expect same-site net operating income at 8% to 10% per annum over the next few years as traditional leases expire and reset to higher market interest rates. We expect it to grow. Additionally, the company plans to develop additional warehouse capacity.
According to a global commercial real estate company CBREthe United States will need an additional 330 million square feet of distribution space by 2025 just to handle the projected e-commerce sales growth.
king of clean energy
next generation energy (Hey you 1.00%) The world’s largest producer of wind and solar energy and a global leader in storage batteries. We invest billions of dollars each year to expand our renewable energy capacity and build additional clean energy infrastructure.
These investments will pay off on pace to grow adjusted earnings per share by as much as 10% annually through 2025. This should support annual dividend growth of about 10% through 2024. Overall, the company expects his investments to exceed $4 trillion. Opportunity to fully decarbonize the US economy over the next 30 years.
Positioned to thrive
Over the next few years, companies will invest trillions of dollars in digitizing, decarbonizing and deglobalizing their operations. This will benefit companies focused on leveraging these megatrends, such as American Tower, Brookfield Infrastructure, Palo Alto Networks, Prologis and NextEra Energy. So an investor could do very well by investing his $5,000 in these five stocks over the next five years.
Matthew DiLallo holds positions at American Tower, Brookfield Infrastructure, Brookfield Infrastructure Partners, Intel, NextEra Energy, Palo Alto Networks, and Prologis and has the following options: Intel’s January 2025 $30 Long call and Intel’s Jan 2025 short put at $30. The Motley Fool has positions in and recommends American Tower, Intel, NextEra Energy, Palo Alto Networks, and Prologis. The Motley Fool recommends Brookfield Infrastructure and Brookfield Infrastructure Partners and recommends the following options: Intel’s Jan 2023 $57.50 Long Call, Intel’s Jan 2025 $45 Long dollar call, short Intel Jan 2025 put at $45. The Motley Fool’s U.S. headquarters has a disclosure policy.