This year was not as expected for many investors. After one of the lowest volatility years in recent history, 2022 was marked by an all-out bear market, along with the worst year ever for the bond market. Dow Jones Industrial Average, S&P 500And Nasdaq compositeChances are you’re staring at a sea of red – and you’re not alone.
However, historically, major stock market downturns have been blessings in disguise. If you’re a long-term investor, stock market corrections, downtrends, and bear markets provide opportunities to attack high-quality companies at low valuations. The current bear market could be an opportunity for patient investors to build wealth on a generational basis.
What are the five surefire stocks with the competitive edge and constant catalysts needed to generate life-changing wealth over the next 20 years?
The first pioneering company that can help investors seriously grow their investment portfolios over the next two decades is a China-based electric vehicle (EV) manufacturer no (NiO 5.50%). Despite historically high inflation, China’s zero-to-COVID-19 strategy and supply chain issues weighing on automakers, NIO’s electric car growth trajectory and innovation make it a no-brainer buy.
China is the No. 1 car market in the world, but the market share of EVs in China continues to be up for grabs. According to an estimate by the China Society of Automotive Engineers, more than half of all new vehicles sold in China should be new energy vehicles by 2035, with EVs leading the way. Once the supply chain issues are resolved, Nio will have no problem ramping up production.
In terms of innovation, Nio is driven by the introduction of more than half a dozen EV models. The recently introduced ET7 and ET5 sedans, with deliveries starting in March and September respectively, face off Teslais the flagship Model 3 and can easily surpass the world’s largest automaker in terms of range (with a battery pack upgrade). The medium ET5 in particular should drive Nio sales in the fourth quarter.
Beyond that, Nio uses unorthodox methods to set himself up for long-term success. The company’s battery-as-a-service plan lowers the purchase price of its EVs and allows buyers to upgrade their batteries at a later date. In exchange for giving up short-term revenue, Nio bets on the loyalty of its early buyers and continues to generate high-margin subscription revenue.
For something a little more off the radar, consider edtech stocks public (PUBM 1.92%) As an innovator that can deliver strong returns over the next 20 years. While ad stocks took a huge hit in 2022, rest assured that the ad industry isn’t going anywhere.
On a macro basis, it’s important to recognize that patient investors do very well with ad-driven stocks. While recessions are an inevitable part of the economic cycle, periods of expansion last much longer. excess more than recession.
But what really plays into the hands of the cloud-based programmatic advertising platform is the steady shift from print and billboards to digital advertising (i.e. video, mobile, and over-the-top (OTT) programmatic advertising). The digital advertising industry is expected to grow at an average annual rate of 14% by mid-decade, and PubMatic is growing significantly faster, thanks in large part to OTT advertising. It also doesn’t hurt that there has been significant consolidation among sell-side providers (SSPs) – SSPs help publishers sell their digital display space – meaning there are few options beyond PubMatic.
But as I said before, the best thing about PubMatic was the decision to design and build its own cloud-based infrastructure. Not depending on a third party for your platform is one Big agreement. As revenue scales, PubMatic should identify a significantly higher operating margin than its peers.
A third surefire fintech stock with the tools and intangibles needed to create life-changing wealth in 20 years PayPal owns (PYPL 1.05%). Despite historically high inflation weighing on consumers, PayPal, the king of digital payments, looks like a solid buy for patient investors.
Based on a recent report from Fortune Business Insights, the global mobile payments market is expected to decline by as much as 29.1% per year between 2021 and 2028. In nominal dollars, we’re talking about an increase of about $2 trillion globally. About $11.8 trillion in 2021 through 2028. The key point is that we’re still seeing early growth in digital transactions.
Another point to note is that PayPal’s key performance metrics are still incredibly strong, even in a challenging economic environment. Total payment volume, unadjusted for currency fluctuations, grew at a low double-digit rate, while active account engagement continued to increase. In the last 12 months, there were an average of 50.1 transactions on active accounts. That is 25% more than at the end of 2020.
PayPal also has leverage it can use to improve its business. It aims to reduce annual operating costs by $1.3 billion by 2023 to counter the temporary economic weakness. The company also completed the acquisition of Japanese Buy Now, Pay Later (BNPL) platform Paydi in 2021 for $2.7 billion. BNPL offers merchants yet another tool to grow their business, which in turn encourages more transactions on PayPal’s digital payment network. ,
furniture stock love sec (Luv 1.70%) is another lesser-known company that has the potential to make long-term investors significantly wealthy over the next 20 years. Lovesack brings a clearly defined competitive advantage and innovation to a traditionally boring industry.
The first thing you notice about LoveSec is that the products are really different. About 88% of net income comes from sales of “sections” – modular couches that can be rearranged in dozens of ways to fit most living spaces. The sectionals come with over 200 different cover options, meaning they will suit any home theme. Plus, the wire at Sectionals is made entirely from recycled plastic water bottles. They are environmentally friendly furniture with optimal choice and functionality.
It is also furniture that is typically aimed at more affluent customers. The good thing about having high-income clients is that they are less likely to be adversely affected by inflation or minor economic disruptions. In other words, LoveSec is better positioned for the fall season than most furniture retailers.
The other major difference between Lovesack and traditional furniture retailers is Lovesack’s nimble omnichannel sales platform. During the pandemic, LoveSec moved half of its sales online. While the company operates 174 retail locations in 40 states, online sales, pop-up showrooms, and brand partnerships all play an important role in promoting its products and keeping overheads low.
The fifth and final surefire stock that could generate life-changing wealth in 20 years is the conglomerate Berkshire Hathaway (BRK.A 0.01%) (BRK.B 0.13%). While Berkshire is not exactly a household name, its CEO, billionaire Warren Buffett, is considered one of the greatest investors of all time.
One of the biggest benefits of buying Berkshire Hathaway stock is (in a roundabout way) getting Warren Buffett as your portfolio manager. Since becoming CEO in 1965, he has led his company’s Class A (BRK.A) stock to an average annual return of 20.1%. This is nearly double the average annual total return of 10.5% for the S&P 500, including dividends paid over the same period.
However, it is the company’s cyclical relationship and reliance on dividend stocks that make it special. Cyclical stocks move with the US and the global economy. They struggle during recessions and excel during periods of expansion. Because these expansions are disproportionately long compared to recessions, Warren Buffett has positioned Berkshire Hathaway’s investment portfolio and proprietary businesses to prosper in the long run.
Buffett’s company also brings in serious dividend income. In the next 12 months, Berkshire Hathaway should collect more than $6 billion in dividends. Companies that regularly pay dividends have historically outperformed over the long term, another achievement for Warren Buffett’s investment portfolio.