Fifty years is a long time to try to project future market demand and growth trends. There's absolutely no way to know how technology will evolve between now and then. After all, 50 years ago, we were still several years away from the first mainstream PC, and the ATM (in a rather primitive form) had just been invented.
However, there are some things that we know will be around forever. For example, we'll always need to seek healthcare when we're sick, find safe places to put our money, and buy food for our families. Here are three stocks with massive long-tailed growth potential that operate in "forever" industries like these.
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Could this be the longest-tailed growth market?
Healthpeak Properties (DOC 0.98%) is a real estate investment trust, or REIT, that focuses on healthcare real estate. The company takes a rather diversified approach, with roughly one-third of its income coming from life science, medical office, and senior-housing properties.
All of these property types should be big beneficiaries of long-term demographic trends. Simply put, the U.S. population is aging -- the number of senior citizens is expected to grow rapidly and steadily over the next few decades. Older Americans tend to use healthcare services more and spend more money on their care. And the aging population will create a large need for pharmaceutical and medical-device development.
Healthpeak has started to aggressively develop new properties with a $1 billion development pipeline that's already 59% pre-leased. And with $2.65 billion in liquidity on its balance sheet, Healthpeak has the flexibility to pursue new opportunities as they arise.
Retail and service businesses that aren't going anywhere
STORE Capital (STOR) is another REIT, but with a very different focus than Healthpeak. STORE's primary focus is on single-tenant properties, most of which are occupied by retail or service-industry tenants.
To be fair, a decent amount of STORE's tenants were forced to close (or limit operations) due to the COVID-19 pandemic, such as restaurants, which is the company's largest tenant type. But with 98% of the company's portfolio now open for business and rent collection of 88% in September, it's fair to say the worst of the pandemic's effects are now in the past.
STORE focuses on tenants that are recession-resistant, e-commerce-resistant, or both. I already mentioned restaurants, which are immune to e-commerce headwinds. Other top tenant types include day care centers, auto repair centers, pet care businesses, furniture stores, and farm-supply businesses. The takeaways are that these are businesses that either sell a service (which makes them resistant to e-commerce) or sell products people need (recession-resistant).
STORE Capital grows through acquisition and estimates a $1.5 trillion addressable market opportunity in its target property types. This rock-solid REIT could still be in the very early stages of growth.
Berkshire Hathaway, 50 years earlier?
Boston Omaha (BOC -0.39%) is often compared to Berkshire Hathaway, and it isn't hard to see why. As a holding company for other businesses, Boston Omaha aims to invest in businesses that produce excellent returns on equity, and then use the cash flow from its operating businesses to buy more businesses and even common stocks. So far, Boston Omaha has built a billboard advertising business and also owns subsidiaries in insurance and broadband communications.
It's even worth noting that one of Boston Omaha's co-CEOs is Warren Buffett's grandnephew (although the elder Buffett has nothing to do with Boston Omaha's business).
The big difference between Boston Omaha and Berkshire is size. While Berkshire Hathaway is a half-trillion dollar conglomerate with more than 60 subsidiary companies and a $200 billion stock portfolio, Boston Omaha is less than 0.1% of Berkshire's size. The ultimate goal of Boston Omaha's management is to grow into a conglomerate like Berkshire.
To be clear, this "baby Berkshire" is the highest-risk name on this list -- and by a wide margin. If it were easy to create the next Berkshire Hathaway, everyone would do it.
However, the early results are certainly promising, and if you have a longtime horizon and a high risk tolerance, taking a stab at Boston Omaha could potentially produce fantastic returns. After all, Berkshire has gained more than 2,000,000% (not a typo) in the 55 years since Buffett took over.
