Investing in the latest trendy company isn’t always the best idea — especially when you’re a long-term investor. The risk is that the company will lose steam and a newer, trendier company will replace it in the limelight.
But there are companies — and trends — that aren’t just the thing of the moment. They’ve proven themselves, and their growth prospects look solid. That’s the case for the following three companies. If you’re looking to invest in something exciting this year, consider these players.
The trend: Online shopping.
It’s been on the rise for a while, but the coronavirus pandemic gave e-commerce a massive boost. Amazon‘s (NASDAQ:AMZN) earnings are proof of that. Last year, the online retail giant reported a 38% gain in revenue, and profit soared 84% as shoppers avoided physical stores and instead flocked to Amazon for essentials and general merchandise.
The key point now is what will happen in the coming years. McKinsey & Co. predicts that online shopping has bright days ahead. Its research shows that people intend to continue buying more this way post-pandemic. And the National Retail Federation forecasts online shopping may rise between 18% and 23% this year. That’s after a 21.9% increase last year.
Why will Amazon continue to benefit? It’s simple. Amazon has made shopping online easy, convenient, and cheap. Through its Prime membership program, for example, customers can get free one- or two-hour grocery delivery. And speaking of delivery, for all product categories, options are plentiful — including secure delivery right into your garage.
The trend: Electric vehicles.
The leader in this market is clearly Tesla (NASDAQ:TSLA). The company holds 69% of the U.S. electric-vehicle market, according to a Morgan Stanley report, and interest in these types of cars has been on the rise. Global sales of electric cars in 2019 climbed 40% year over year, according to the International Energy Agency.
It looks like more and more people will buy electric cars in the coming years. The worldwide electric-vehicle market, at a 22.6% compound annual growth rate, is forecast to reach more than $802 billion by 2027, an Allied Market Research report showed. Last year, Tesla delivered about half a million vehicles and reported a 31% increase in automotive revenues for the full year and a 58% increase in automotive gross profit.
One word of caution, however. Competition is rising as other carmakers boost their electric-vehicle offerings. While Tesla still is dominant in the U.S., its market share has declined from 81% a year ago. It’s important to keep a close eye on market share reports, but if Tesla maintains leadership, there’s reason to be confident about the future.
The trend: Online medical visits.
Like online shopping, telemedicine also gained in leaps and bounds during the worst of the pandemic. Patients opted for virtual visits from home to avoid contact with others. And Teladoc Health (NYSE:TDOC) saw visits and revenue soar.
The virtual-care company reported a 156% increase in visits to more than 10 million for the full year. Revenue surged 98%, to surpass $1 billion. Teladoc offers online visits in about 450 medical subspecialties and operates in 175 countries. It’s members total more than 51 million.
Looking ahead, Teladoc expects full-year 2021 revenue in the range of $1.95 billion to $2 billion — and total visits between 12 million and 13 million. Growth this year may not be as dramatic as that of last year. As the pandemic wanes, some patients will return to doctors’ offices. But after discovering the convenience of telemedicine, many will continue with online visits.
Forecasts are favorable. The global telemedicine market, at a compound annual growth rate of 40%, will reach $194 billion in 2023, according to The Business Research Company. And a Fortune Business Insights report says Teladoc holds a “dominant position” in the market, thanks to a wide customer base and an established network of healthcare practitioners.
Amazon, Tesla, and Teladoc gained 76%, 743%, and 138%, respectively, last year. And it looks like they’ll keep benefiting from the unstoppable trends that have already made them top stocks.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.