Picking stocks is a daunting task even for skilled investors. That’s especially true when analyzing companies that deal in new, emerging, or experimental themes and technologies. But the companies that experiment today will be the ones that innovate tomorrow. The ones that innovate will be the ones that make their investors smile in the 2020s and beyond. Here’s a look at the stocks to buy now if you want to profit from the innovations that will define the future.
What Are the Best Innovation Stocks to Buy Now?
No one has a crystal ball, and the stock market moves according to the hopes and plans of no investor. But if you understand the emerging trends and can identify the companies that are best positioned to benefit from them, it’s certainly possible to make educated guesses. These companies, according to experts, are primed to cash in on tomorrow’s revolutions thanks to the innovations they’re making today.
1. Analog Devices (ADI)
Fewer things sound more yesteryear than the word “analog,” but Analog Devices is consistently ranked as one of the most innovative companies in the world. In July 2020, the chipmaker acquired Maxim Integrated Products.
The acquisition was an important part of a strategy to position the company to profit from emerging trends. Analog Devices is already benefitting from the rollout of 5G and has spent years shifting its priorities and capacities to serve tomorrow’s tech — particularly green tech. Its chips are already powering robotics, AI and electric cars.
2. Amazon (AMZN)
Amazon’s incredible innovations have disrupted every industry the company has touched since the 1990s. Amazon reinvented commerce in the digital age — and that trend continues today. According to Forbes, Bezos and company are innovating for tomorrow by focusing on supply chains and logistics.
It’s expanding Amazon Trucking, its in-house fleet that it hopes will end the company’s reliance on shipping providers like UPS. Also part of Amazon’s logistical innovations is its network of super-automated warehouses.
Now they’re becoming even more precise and advanced as Amazon expands its massive fulfillment centers beyond big cities to better serve more sparsely populated areas. It’s also acquiring more jets as part of an ambitious expansion of Amazon Prime Air.
3. Alibaba (BABA)
The so-called Amazon of China, Alibaba is on sale right now thanks to a huge drop in its stock price that came in the wake of a regulatory threat at the start of the year. That might make it a very good buy moving forward.
As millions of people continue to be lifted out of poverty in China, one of the first things those people do when they reach the middle class is to buy things — and most of that buying is taking place online.
According to Capital.com, “Chinese e-commerce sales will outpace U.S. sales at nearly $2 trillion in 2021, and in 2022 they are expected to rise by 11% to more than $3 trillion, for a 55.6% share of retail.” Now that it controls a full 50.8% of the market, Alibaba is poised to cash in on China’s coming e-commerce tsunami more than any other company in the world.
4. Visa (V)
When you think of companies of the future, Visa might not be what comes to mind. Chances are good, after all, that you have a Visa card in your wallet right here in the present. Its business model, however, is primed to benefit from the innovations that are on the horizon.
Visa is putting more and more resources into its digital payments and contactless purchases capabilities — and those are the platforms driving future growth. According to Investor’s Business Daily, the company’s already strong record of consistent earnings has room to grow as Visa expands into cryptocurrency, fintech, and other technology of tomorrow.
Did You Know?
People who aren’t comfortable picking individual companies can buy into a whole bunch of the hottest innovation stocks all at once with the purchase of a single ETF. Ark Invest, for example, is known for its suite of actively managed innovation ETFs. Global X is also a top provider of ETFs with innovation/disruptor themes.
5. Nvidia (NVDA)
Investors who got rich off of Nvidia’s extraordinary pre-selloff run need no convincing of the company’s record of growth — but many experts think Nvidia has plenty of room to grow even more. It had a hall of fame in 2020.
Its bread-and-butter gaming chips that drove that growth are only part of the company’s strategy moving forward. While video game GPUs will remain Nvidia’s bedrock, the company is establishing itself as a major player in the ever-growing data-center segment while expanding its chips for use in top-of-the-line AI programs and immersive gaming.
6. BlackRock (BLK)
You know BlackRock from its super-popular iShares ETFs. That suite of funds helped launch BlackRock as one of the leading financial disruptors of the 21st century and one of the main drivers of the passive investing revolution. Now it’s innovating again.
BlackRock recently earned a place in a forward-looking fund of its own — the Argus innovation portfolio. That’s largely because BlackRock is one of the biggest players in what’s shaping up to be the hot investment theme of tomorrow: ESG–which stands for environmental, social, governance–investing.
7. T-Mobile (TMUS)
T-Mobile was long a little-brother company compared to the big boys over at Verizon and AT&T. Its recent merger with Sprint changed all that. It’s still not as big as the two big dogs, but it’s now a not-too-distant third and the fastest-growing carrier of them all.
When it completed its $26 billion merger with Sprint in 2020, T-Mobile acquired not only Sprint’s customers but also its enormous spectrum assets. Those assets will serve as the building blocks of T-Mobile’s future 5G infrastructure. As Forbes points out, T-Mobile is already making inroads with business customers that should have the No. 1 and No. 2 companies worried.
8. PayPal (PYPL)
A generation ago, PayPal’s partnership with eBay changed the way human beings bought and sold things in the 21 century. Now, moving into the century’s third decade, PayPal is out in front once again. It’s a global leader in digital, no-contact payment — clearly a trend that will not pass with the COVID-19 pandemic.
PayPal was one of the earliest adopters of Bitcoin, and now its platform lets users buy, sell, hold, and move many of the top cryptocurrencies — the most mainstream company by far with those kinds of offerings. Also, its “Buy Now Pay Later” installment plan service has been a wild success and is still gaining steam.
9. Adobe (ADBE)
Adobe is now and has for a long time been the undisputed heavyweight champion of creative software for designers. That’s a valuable title to hold moving toward both the near and more distant future. It puts Adobe in a position to gobble up a huge share of the constantly expanding market for advertising creation and management and digital video content. Revenues in Adobe’s Digital Media segment grew by 20% in 2020, according to Investor’s Business Daily, and subscription revenue grew by even more.
10. Fiserv (FISV)
If it seems like the list is getting a bit crowded with payment services, keep in mind that Fiserv stands apart even from innovators like Visa and PayPal. That’s because its services are best-in-class among so many market segments.
For example, according to SeekingAlpha, Fiserv is the No. 1 global merchant acquirer, the No. 1 global issuer processor, the No. 1 U.S. provider of core processing, mobile banking, and online banking, and the No. 1 P2P and bill-payment provider. The company is predicting that revenues will grow by as much as 12 percent in 2021 alone.
11. Catalent (CTLT)
Catalent showed its potential both as an innovator and as an earner during the COVID-19 crisis. Its unique business model is an innovation in and of itself. Catalent partners with biotech companies as well as pharmaceutical companies both to produce vaccines and to manufacture them.
The power of Catalent’s new delivery technologies was on full display during the pandemic, when it partnered with all the top vaccine makers, including J&J, Moderna and AstraZeneca. In total, it holds dozens of similar partnerships, which have proven to be a model for the future after the striking success of the vaccine rollout.