The 3 Trends of Enrichment

The only constant in this life is change. Things are changing fast. A general understanding of how things are changing and which industries are likely to benefit can make investing much easier.

Try to position yourself in front of the wave. Huge societal trends are affecting three main areas: alternative energy, health care, and emerging markets.

Alternative energy
Gas prices at $4 per gallon, with no end in sight, have reignited the old debate about alternative energy sources. Only this time, it's for real. Global warming and our ever-increasing dependence on foreign oil have set in motion a bona fide search for workable alternatives. The trend will only continue.

Health care
People are living longer. The world's population is getting older. In fact, the fastest-growing segment of the world's population is 65 and older. Older people tend to use more health care. In addition, nations all over the world are increasingly prosperous and thus have populations more demanding of health care. All of this combines to create an unmistakable trend of increased health-care spending.

Emerging markets
Nations all over the world have embraced capitalism and free markets on a scale never before seen. The simultaneous expansion of so many economies has created a long-term worldwide economic boom. Investment opportunities have never been more numerous. China and India are two principal beneficiaries of this trend.

A great place to screen for the best stocks in these trends is Motley Fool CAPS. Stocks rated four and five stars in CAPS have had remarkable performance. Here are some promising stocks in these trends.

Company

Sector

Rating

Suntech Power Holdings (NYSE: STP  )

Alternative Energy

*****

Darling International (NYSE: DAR  )

Alternative Energy

*****

Sasol (NYSE: SSL  )

Alternative Energy

*****

PowerShares Golden Dragon Halter USX China (NYSE: PGJ  )

China

****

Morgan Stanley India Investment Fund (NYSE: IIF  )

India

*****

Kinetic Concepts (NYSE: KCI  )

Health Care

*****

Dr. Reddy's Laboratories (NYSE: RDY  )

Health Care

****

Suntech Power Holdings
This company actually capitalizes on two trends: It's a solar energy company based in China. The stock is close to its 52-week low and sports an impressive return on equity of more than 20.

Sasol
This South Africa-based integrated oil and gas company develops synthetic fuels with its own technology. The company is selling at a compelling valuation and also offers a lot of international exposure. Highly rated CAPS player hondo928 sees "plenty of room for upward movement."

PowerShares Golden Dragon Halter USX China and Morgan Stanley India Investment Fund
One of the easiest ways to take advantage of the China and India markets is with mutual funds and exchange-traded funds. They both give you general exposure to the country's overall market and enable you to play the country rather than pick individual stocks. The China ETF seeks to track the Halter USX China index. Morgan Stanley actively manages the India fund.

Kinetic Concepts
This U.S. medical technology company provides products and therapies for wound care. While other promising health-care stocks have had a recent run-up in price, Kinetic Concepts is still hovering near its 52-week low, primarily because of costs associated with a recent acquisition. It has a good product in a growing business and its shares are dirt cheap.

Dr. Reddy's Laboratories
Dr. Reddy's Laboratories is a global pharmaceutical company based in India. While China gets most of the attention, India is an explosive economy as well. This company is a big player in the generic-drug market, which will only become more relevant as health-care costs rise worldwide. The shares are selling very near their 52-week low.

Getting the trend right can make picking individual stocks much easier. The world is undergoing a long-term economic boom. Today's market decline might very well be presenting us with one of the greatest market entry points ever. Doing your homework can really pay off.

Which stocks do you think will be the best to own? Speak your mind on Motley Fool CAPS. More than 110,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Suntech Power Holdings is a Motley Fool Rule Breakers recommendation. Sasol is recommended in both Global Gains and Income Investor.

Fool contributor Tom Hutchinson holds no financial position in any companies mentioned. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 04, 2008, at 5:45 PM, mighty00 wrote:

    When a company, such as Suntech, uses an aggressive debt strategy to fund growth, you should EXPECT the return on equity to be high, as this article indicates.

    That is certainly no reason to buy it!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 699466, ~/Articles/ArticleHandler.aspx, 11/27/2014 3:05:05 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement