While trends differ in size, global supertrends can cover several decades and in some cases, span generations. And in this article I will look at 20 possible supertrends and how investors might benefit from them.
**Update**: You can now track the performance of these picks: Just Click Here and hit the second tab Global Supertrends!
Global Supertrends: Background
A supertrend is smaller than a megatrend but it’s nonetheless a distinct societal shift, one that causes profound global changes. Spotting a supertrend is difficult but potentially, highly rewarding.
First, a word of caution
While the stocks provided here are linked to their respective ‘supertrend’, some may be risky. Where the future is concerned, there is no such thing as low risk, and with future trends there’s usually no shortage of charlatans trying to jump on the bandwagon!
Each supertrend is separated into one of the 6 themes: population, medicine, climate change, emerging economies, technology, and threats… Let’s get started.
Understanding population is vital for predicting the future and the biggest theme for the next few decades will be ageing demographics combined with rapid population growth. By the end of the 21st Century it’s likely that population growth will finally stabilise and may even start to decline.
#1. Ageing Demographics
It’s no secret that the Western world faces the issue of ageing demographics with senior citizens expected to account for 21% of the US population by 2050.
But what most people don’t realise is that ageing population is now a feature of developing countries too. And 20% of the world’s population is expected to be over 60 by 2050.
Naturally, this will cause demand for all sorts of healthcare and pharmaceutical related products. Financial service companies with an over-reliance on pension products could come under severe pressure too.
Stock to buy: Omega Healthcare Investors $OHI
Omega Healthcare is a Real Estate Investment Trust (REIT) that provides financing to the healthcare industry, in particular, nursing home facilities in the US. As of October 2014, the company owned 562 nursing facilities and 61,200 beds across 37 states.
‘Nursing Home’ Google Trend:
#2. Agriculture/ Population Growth
It’s also no secret that population growth is expected to continue to grow rapidly and we should hit 8 billion people by 2025 according to the UN.
Such growth will likely put significant pressure on our ability to keep up with global food production.
The Research Program on Climate Change, Agriculture and Food Security (CCAFS) estimate that cereal production must increase by 940 million tonnes by 2050 to meet demand and meat production must increase by 196 million tonnes. And these numbers are assuming no change to current population growth rates.
Stock to buy: Deere & Co. $DE
Deere & Co. manufacture agricultural, construction and forestry machinery. They’re one of the leading tractor manufacturers in the world and should benefit from the coming need to feed the planet. DE currently has a PE ratio of just 9.97.
‘Farming’ Google Trend:
While global populations are expected to continue to grow, much of that growth will take place in the world’s megacities.
According to Bloomberg, there are currently 28 urban areas with at least 10 million people. By 2030 that number should rise to 40 and much of that growth will take place in Asia.
In China, the urbanisation rate is expected to hit 60% in 2020 and Beijing hopes to have doubled it’s underground rail network by 2015.
Investing in Asian metropolises may not be easy. One idea would be to focus on property as the demand for inner city dwellings should go up.
Stock to buy: China Resources Land Ltd. 1109:HK
China Resources Land Ltd. develops and invests in properties in Hong Kong and mainland China. Shares are listed on the Hong Kong Stock Exchange. Another alternative would be to invest in Chinese Real Estate ETF $TAO.
‘Megacity’ Google Trend:
Clearly there will be plenty of overlap between many of the global supertrends discussed.
Developments in medicine will no doubt crossover with developments in technology and the demand caused by ageing populations.
#4. Stem Cell Therapies
Stem cell research is one area that scientists are hoping to exploit in the future as a means of studying diseases and testing out ground-breaking new treatments.
Stem cells are already widely used by doctors to treat patients with leukaemia and blood disorders. But scientists hope that one day stem cells can be used to replace the cells destroyed by other devastating diseases such as diabetes, Parkinson’s disease and liver disease.
Stock to buy: Aastrom Biosciences $ASTM
Aastrom Biosciences is a micro-cap stock trading on the Nasdaq. The company is developing cellular therapies for use in treating severe diseases and is currently in trial for two cell therapy products as well as a multicellular therapy for the treatment of heart failure.
Word of Warning: The stem cell industry seems to be growing in popularity among stock promoters, futurists, and punters alike. Extra caution is required when investing in this ‘hot’ sector.
‘Stem Cells’ Google Trend:
#5. Robotic Medicine
It may sound like the stuff of science fiction but robots are becoming increasingly relied upon in the world of medicine. The use of robotic knives, for example, allow surgeons to work through much smaller incisions which can result in significantly less scarring and pain for a patient. And with over 200,000 robotic procedures performed worldwide in 2009, this is a trend that is only likely to gain more traction in coming years.
Stock to buy: Intuitive Surgical Inc. $ISRG
Intuitive Surgical manufactures robotic surgical systems and now produces the popular da Vinci Surgical System.
The da Vinci system features 3D HD vision with instruments that can bend and rotate far better than a human wrist. This allows surgeons to operate with precise movements and minimise the amount of trauma to a patient’s body tissue.
‘Robotic Surgery’ Google Trend:
#6. DNA Vaccines
Since the 18th Century, vaccination has been the most effective method for preventing infectious diseases. And this miracle of science has been responsible for the eradication of smallpox and the restriction of diseases like polio and tetanus.
Today, a new approach known as DNA vaccination is developing rapidly.
By introducing genetically engineered DNA to an organism it’s able to simulate a much wider array of immune responses without having to rely on infection from the virus.
This is a safer way of vaccination and though experimental, DNA vaccination has been applied to a number of viral, bacterial, parasitic and tumour disease models with some success.
Stock to buy: Inovio Pharmaceuticals $INO
Inovio Pharmaceuticals is a small-cap biotech company that develops synthetic DNA vaccines for the treatment of devastating illnesses and diseases.
The company is creating a pipeline of vaccines to treat cancers such as cervical, prostate cancer and leukemia. It’s also working on treatments for many infectious diseases such as HIV, influenza and malaria.
‘DNA Vaccines’ Google Trend:
Last year, carbon-dioxide in the atmosphere hit the highest level in four million years. While some still dispute the inconvenient truth that is climate change, it’s an issue that politicians and organisation will soon be unable to ignore.
#7. Natural Gas
While natural gas on it’s own is no solution to climate change, gas-fired plants emit half as much carbon-dioxide as coal plants. They also let off less pollutants and toxic substances like mercury. Natural gas is also a cheap and plentiful fuel that has been touted as a replacement for oil.
Stock to buy: Chesapeake Energy Corp. $CHK
A simple way to invest in natural gas is through an ETF such as $UNG. Another alternative is Chesapeake Energy Corp, one of the largest natural gas holders in the US.
‘Natural Gas’ Google Trend:
#8. Solar Power
Natural gas is thought to be a cleaner replacement for coal but there is evidence to suggest that the actual drilling of natural gas contributes to excessive methane emission, negating some of it’s cleaner benefits.
A better alternative is solar power which has an encouraging future, albeit a poor track record for investors. And it’s been said that the earth receives enough sunlight in one hour to power the world for one year.
While solar can be expensive to set up, the benefits are that it can be used almost anywhere and requires very little maintenance. That’s unlike hydro and wind power stations which are only viable in certain areas.
Stock to buy: SunPower Corporation $SPWR
Solar stocks have been lousy investments over recent years as companies battle it out on low margins and high competition. SunPower Corp. trades on the Nasdaq and is a $3 billion solar company that counts Warren Buffett among its investors.
‘Solar Power’ Google Trend:
#9. Wind Power
The advantage of wind power is that it’s low maintenance and gives a high level of output for small cost. Wind power was Spain’s top source of electricity in 2013 and in the Nordic regions, it’s responsible for putting fossil fuel plants out of business.
Stock to buy: Vestas Wind Systems $VWS.CO
Vestas Wind Systems is a Danish company that trades on the Nordic stock exchange but it’s the only global energy company in the world dedicated exclusively to wind.
‘Wind Power’ Google Trend:
When compared to wind and solar, hydropower gives the most bang for the buck. It has the lowest cost per watt an hour, it’s predictable and generally low maintenance. The disadvantages are that hydropower can have high initial costs and it’s not a system that can be just set up anywhere. Hydropower takes a lot of planning and is not always suitable for colder climates.
That said, hydropower is the most widely used renewable energy source and growth is particularly strong in China, where it’s expected hydropower will double by 2035.
Stock to buy: Brookfield Renewable Energy Partners $BEP
Brookfield Renewable Energy Partners are an asset management fund that owns and operates over 200 hydropower stations across the Americas and Europe. The company has a market cap of over $8 billion and is diversified over 72 river systems.
‘Hydropower’ Google Trend:
A theme that runs through most futurist discussion is the rise of emerging economies, most notably in the East and the tilting of power and wealth towards Asia. According to Goldman Sachs, Chinese GDP will top $70 trillion by 2050, 80% more than US GDP. This will make the US the only current member of the G7 to still qualify as one of the world’s seven largest economies.
One natural benefactor of rising wealth is that ordinary citizens have more money to spend on luxury items and travel. This will benefit Chinese tourism in two ways.
Firstly, rising wealth will enable the Chinese to travel more frequently and further afield.
Secondly, rising wealth in China will make the country more attractive to foreign tourists; and China is expected to become the largest tourist destination in the world by 2020.
Stock to buy: Ctrip.com International Ltd. $CTRP
Chinese shares can be notoriously hard for foreigners to get hold of but thankfully, CTRP trades on the Nasdaq with a market cap of $8.4 billion.
CTRP is the largest consolidator of airline tickets and hotel rooms in China and is therefore well placed to benefit from two global supertrends combined: Chinese tourism and the Internet.
‘Ctrip’ Google Trend:
#12. Luxury Goods
As noted, the rise of wealth in China will likely see greater demand for luxury items such as jewellery, wine, and watches. In fact, spending on luxury goods in China grew by 135% between 2009 and 2012. That rate is expected to drop somewhat but it should still be in mid-double digits by 2020.
What’s also apparent is the Chinese love for US luxury items and the Chinese are just as likely to buy their luxury items abroad as they are at home.
Stock to buy: Estee Lauder Companies Inc. $EL
Luxury goods should be a growth sector and female products are likely to provide steadier returns than male. Estee Lauder create high quality cosmetic products and have a big profile in China and other parts of Asia. The company has brick-and-mortar stores in over 90 Chinese cities.
‘Estee Lauder’ Google Trend:
Technology is the engine that drives societies forward so it should be no surprise that technology features heavily on any futurist report. Going forward, the Internet should continue to drive innovation and be at the catalyst for technological change.
#13. 3D Printing
According to Adrian Wooldridge of The Economist “the coming decades will see the biggest revolution in manufacturing since the arrival of mass production.”
While manufacturing used to depend on economies of scale, 3D printing (or additive manufacturing) will make it possible to produce products at the same cost, whether you are creating 1,000 or a batch of one.
Anyone will be able to create products and use the Internet to market those products globally, while bigger firms such as Boeing are already seeing cost benefits from ‘printing’ their own aeroplane parts.
Stock to buy: Stratasys Ltd. $SSYS
3D printing stocks have had a difficult 2014, largely because of the huge run-up in the industry since 2009. But be assured, this is a game-changing industry and high growth rates are all but guaranteed. Stratasys Ltd. manufactures 3D printers and production systems and is the biggest 3D printing firm in the US with a market cap of just over $5 billion.
‘3D Printing’ Google Trend:
#14. Internet of Things
Confirmation of the significance of the ‘Internet of things’ trend came earlier this year when Google bought smart thermostat and smoke detector manufacturer Nest for $3.2 billion.
The Nest thermostat is smart enough to learn the temperatures you like and turn itself down when you’re away; but this will only be the beginning of things to come.
Soon, fridges will reorder food, implants will track our health, and medicine bottles will remind us when to take our dose.
Stock to buy: Intel Corporation $INTC
Apple and Google are already making movements in this arena but another good choice is Intel. IoT devices will need ultra-small modems and microchips, like those developers at Intel are currently working on. Intel CEO Brian Krzanich has already spoken at length of how Intel is tackling the Internet of Things from many different angles.
‘Internet of Things’ Google Trend:
#15. Electric Vehicles
Electric cars are surprising in that they can actually get cleaner with age. And a recent report from the White House revealed more than 70 electric utility companies are devoting at least 5% of their fleet budgets to plug-in electric vehicles and technologies.
Politicians, governments and the public all seem to love the new breed of electric cars and there’s no doubt they will be a big part of the future.
Stock to buy: Tesla Motors Inc. $TSLA
Elon Musk’s company Tesla is the frontrunner in the electric vehicle market though the stock has had a meteoric rise since 2013.
Other alternatives include Toyota Motors, which is investing a lot of money into electric cars, or battery manufacturer Polypore International Inc $PPO.
‘Electric Cars’ Google Trend:
#16. Quantum Computing
Unlike digital computers, which require data to be encoded into binary digits (0 or 1), quantum computers use ‘qubits’ allowing them to be in more than one state simultaneously.
Although still in their infancy, quantum computers will be able to solve problems and process data much more quickly than standard computers.
And quantum computing is an area that is seeing heavy investment from the likes of Google, the CIA, and Amazon.
Stock to buy: Harris & Harris Group Inc. $TINY
Other than investing in Google, there are not many ways to get exposure to the quantum computing trend with very few publicly listed companies operating in the niche. One option is to invest in Harris & Harris Group, a venture capital firm that invests in disruptive technologies. Investing in Harris & Harris gives exposure to D-Wave’s quantum computing technology.
‘Quantum Computing’ Google Trend:
#17. Carbon Nanotechnologies
Carbon nanotubes were first discovered in 1991. They’re composed of carbon atoms in hexagonal shapes; they’re malleable, strong and can spring back to their original shape after being bent.
The possibilities for this technology are almost endless; from building flexible, miniature circuits, to creating drug-delivery systems inside the body, to building bridges and buildings, to replacing silicon in solar panels.
Stock to buy: FEI Company $FEIC
Nanotechnology stocks have seen a lot of hype in recent years and many penny stocks in the sector crashed and burned. FEI Co. trades on the Nasdaq with a market cap of $3.34 billion and is engaged in developing a wide range of applications in the nano-space.
Carbon nanotubes v Graphene’ Google Trend:
#18. Big Data
As the Internet develops, the growth of data and information will continue to accelerate. According to research firm IDC, the quantity of stored information in the world doubles every two years. That number was 1.8 zettabytes in 2011, or 1.8 trillion gigabytes of information.
Companies that are able to sort, store and provide that information have become extremely valuable (see search engine Google for an easy example).
Stock to buy: Seagate Technology $STX
Seagate Technology developed the first 5.25 inch hard disk drive in 1980. The company is now a leader in data storage, surveillance and cloud backup. The company is a S&P 500 constituent and trades with a PE ratio of 14.39.
‘Big Data’ Google Trend:
Globalisation has brought the world closer together, diminishing borders and geographical constraints between markets and people. But one downside of interconnectedness, is that it becomes easier to take down large networks through the infection of a virus or other security threat. Security will therefore be a big consideration for organisations and governments over the coming years.
In a world where everything is stored in cyberspace, the danger of losing access to that information is very real, and the problem with cyber-warfare is that it doesn’t cost rogue parties too much money to get started. Cyber-warfare usually takes the form of malicious software; viruses, worms and trojan horses. Going forward, governments and organisations will be looking to invest heavily in this area in order to ward off security threats.
Stock to buy: Fortinet Inc. $FTNT
Fortinet Inc. manufactures high performance network security products and services and trades on the Nasdaq with a market capitalisation of $4.4 billion. The company grew revenues by 23% in 2012 and 15% in 2013.
‘Cyber-warfare’ Google Trend:
#20. Biological Threats/ Viruses
Despite the recent panic over the Ebola crisis, the number of outbreaks of infectious diseases has in fact been in a steady downward trend since 1998:
However, that doesn’t mean the threat of a biological attack or viral outbreak has diminished. The key to the Ebola virus is that, although deadly, it’s not as contagious as some other strands could be. The potential for devastation from such a virus in an interconnected world is not worth thinking about.
Stock to buy: Lakeland Industries Inc. $LAKE
Lakeland Industries manufacture protective garments designed to withstand viruses and biological attacks. Shares in Lakeland soared in October when the Ebola crisis hit the headlines but have since dropped back to more realistic levels.
‘Ebola v Virus’ Google Trend:
Investors weary of the threat of biological attack might like to not only buy stock in Lakeland, but to order one of their Hazmat suits.
Some good books about global trends:
Excellent book by Lars Tvede published in 2010 that discusses the coming big global trends.
Another excellent book, this is from The Economist and includes a collection of articles from Economist writers.
Update: You can now track the performance of these picks: Just Click Here and hit the second tab Global Supertrends!
Disclosure: This post should not be construed as investment advice or recommendation for any of the stocks mentioned. I have no business relationship with any stocks mentioned but I do own shares in STX.
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Joe Marwood is an independent trader and the founder of Decoding Markets. He worked as a professional futures trader and has a passion for investing and building mechanical trading strategies. If you are interested in more quantitative trading strategies, investing ideas and tutorials make sure to check out our program Marwood Research.
This post expresses the opinions of the writer and is for information, entertainment purposes only. Joe Marwood is not a registered financial advisor or certified analyst. The reader agrees to assume all risk resulting from the application of any of the information provided. Past performance is not a reliable indicator of future returns and financial trading is full of risk. Margin trading can lead to losses more than in your account. Mistakes in backtesting and presenting of analysis regularly occur. Please read the Full disclaimer.