Put your time travel hat on: It's now three calendar flips away from 2030 and we're perusing a list of the best-performing stocks of the last decade, the 2020s. (The specifics: The list contains stocks that were profitable and at least mid-caps in size at the start of the period.)
There seems to be a good chance that these three stocks will be on our list: artificial intelligence leader NVIDIA (NVDA -1.72%), diabetes specialist Insulet (PODD 4.47%), and -- no, I didn't bump my head as we were propelled through the fourth dimension -- water utility giant American Water Works (AWK 1.21%).
Gear up for time travel once again, as we're now pulling a reverse Marty McFly and are heading back to the past -- late 2019 -- for our discussion of these three stocks.
An Einstein–Rosen bridge, or wormhole, which theoretically can reduce travel time and distance through space-time. Image source: Getty Images.
Overview
| Company | Market Cap | Catalyst(s) for Growth | Wall Street's Projected EPS Growth Over Next 5 Years | 10-Year Total Return |
|---|---|---|---|---|
|
NVIDIA |
$118 billion |
Growth in the artificial intelligence (AI), driverless vehicle, and gaming markets. |
12.5% |
1,490% |
|
Insulet |
$9.6 billion |
Increase in incidence of diabetes and market share gains. | 25% | 1,360% |
|
American Water |
$22.1 billion | Industry consolidation; infrastructure upgrades; climate change. | 8.2% | 695% |
|
S&P 500 |
N/A | N/A | N/A | 239% |
Data sources: Yahoo! Finance and YCharts. Data as of Oct. 17, 2019. EPS = earnings per share.
NVIDIA
In 2029, self-driving vehicles will probably be in the early stages of ferrying folks around throughout the United States -- or, at the very least, they'll be on the verge of obtaining the regulatory green light. It also seems safe to project that nearly all companies will be using AI to a much greater degree than they are today, computer gaming will be even more popular among consumers, virtual reality (VR) will have taken off, and drones will have more applications thanks to technological advances and loosening regulations.
NVIDIA stands to profit from all these trends. There's arguably no technology company that has its tentacles in as many emerging tech trends, other than perhaps Amazon and Google parent Alphabet.
The Silicon Valley-based company dominates the discrete GPU market for computer gaming, and its GPU-based approach to deep learning, the leading type of AI, is considered the gold standard. While its auto business is relatively small, look for its growth to accelerate rapidly once driverless vehicles become legal across the U.S.
Insulet
The number of people being diagnosed with diabetes -- types 1 and 2 -- has been steadily increasing, and there's no reason to believe this unfortunate global trend will end. In fact, with the aging of the giant baby boom generation -- those ages 55 through 72 -- growth in the incidence of type 2 diabetes is poised to accelerate.
Image source: Insulet.
While many companies are involved in making products aimed at helping people with diabetes live healthier lives, Insulet stands out. The Boston area-based company's tubeless insulin pump, Omnipod, is being rapidly adopted by folks with type 1 and insulin-requiring type 2 diabetes. In its most recently reported quarter, Q2, Insulet's revenue soared 43% year over year. Moreover, the company expects full-year revenue growth of 24% to 27%, which will likely prove too conservative, as it regularly beats its own guidance. In the third quarter of last year, Insulet achieved quarterly profitability for the first time.
Additionally, a notable catalyst for growth is on the, um, horizon: In late 2020, Insulet plans to launch its Horizon system, an automated insulin delivery system, which uses a DexCom continuous glucose monitor to dose insulin.
American Water
Yes, I'm predicting that a supposedly stodgy water utility stock will be a top performer over the next decade. That shouldn't sound so absurd when you consider that shares of industry leader American Water returned 2.9 times as much as the S&P 500 over the last 10 years. (That's a notably better performance than many popular tech growth stocks.) Moreover, they did this with considerably less volatility than the overall market.
Granted, American Water and other utilities were helped by historically low interest rates, but rates seem poised to stay at relatively low levels for some time. Moreover, the water utility space has some notable catalysts for growth: industry consolidation, the need for major infrastructure upgrades, and climate change. As the earth continues to get warmer, demand for fresh water should increase.
American Water, based in New Jersey, operates regulated utilities in 16 states and provides some type of service to more than 14 million people in 46 states. American Water's industry-leading size and geographic diversity give it a competitive advantage in acquisitions. As a bonus, the company pays a dividend. While it's currently yielding only a modest 1.6%, investors should be able to count on continued generous annual dividend increases.
No more time travel for today, but you can keep the hat. My gift.
