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Why I'm Betting Big on This 1 Megatrend

By Keith Speights - Jan 25, 2021 at 5:01AM

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It's a big bet but not a big gamble.

Wayne Gretzky hung up his hockey sticks a long time ago. But something he said is still repeated often: "I skate to where the puck is going to be, not where it has been." Although Gretzky's quote has become something of a cliche, it nonetheless remains highly relevant in many areas -- including investing.

You probably hear a lot about "unstoppable trends" that present terrific opportunities to profit. Some of these are even referred to as megatrends because of their global impact. For investors, the idea is the same concept that Gretzky articulated years ago: Focus on what's going to happen in the future.

Identifying and investing in major trends is a great way to do this. It's what I do with my personal portfolio to a large extent. Here's why I'm betting big on one megatrend, in particular.

A man's hands held up to digital images of healthcare icons

Image source: Getty Images.

One megatrend, three compelling reasons

The megatrend that I'm most excited about is the use of technology to solve some of our most significant healthcare issues. There's no question that this is a trend that has a far-reaching impact. And it's indisputable that technology is already helping address healthcare challenges in a greater way than ever before.

Why am I investing heavily in this megatrend? I have three compelling reasons.

First, I agree 100% with Motley Fool co-founder David Gardner's philosophy: "Make your portfolio reflect your best version of our future." My best vision of the future is a world where people don't die from cancer and other diseases (especially when they're young), have convenient access to highly effective healthcare services, and are able to live long and productive lives.

Second, I have no doubt whatsoever that the demand for technology focused on healthcare will increase significantly over the next few decades. Another major trend -- aging populations -- will be a key factor driving this higher demand.

Third, my view is that we're at the threshold of huge technological innovations in several healthcare areas. Gene editing, genomic testing, and artificial intelligence (just to name a few) remain in their early stages.

Lots of great stocks

I have invested in the stocks of many of the most promising areas of healthcare technological innovation. One of my favorite healthcare stocks is Intuitive Surgical (ISRG 2.53%). The company pioneered the use of robotic surgical systems more than 20 years ago. Today, there are close to 6,000 of Intuitive's da Vinci systems in use worldwide. 

Some say that we're in the "golden age of biotechnology." I believe it. That's why I'm a big fan of biotech stocks. I own shares of Vertex Pharmaceuticals (VRTX 3.19%), which I'd argue ranks as one of the top biotech stocks right now. Vertex claims a monopoly in treating cystic fibrosis (CF). It's also making impressive progress in treating other rare genetic diseases as well as a not-so-rare disease with a potential cure for type 1 diabetes advancing to clinical testing this year.

Editas Medicine (EDIT -0.22%) is another biotech stock that I like and own. It's a leader in CRISPR gene editing. Editas' programs have a long way to go before they could potentially reach the market. However, I'm cautiously optimistic about its chances of revolutionizing the treatment of several genetic diseases and cancer.

There are so many great biotech stocks to choose from, though, that I decided a few years ago to buy many of them in one fell swoop with the SPDR S&P Biotech ETF (XBI 1.09%). This exchange-traded fund (ETF) currently holds positions in 170 biotechs. 

My focus extends beyond biotech and robotic surgery, though. I'm a proud shareholder of Guardant Health (GH 4.03%), a leader in developing liquid biopsies that could fundamentally change how cancer is diagnosed. Guardant Health already markets liquid biopsy products that are used as companion diagnostics for cancer immunotherapies. Its really big opportunity, however, lies in early stage cancer detection and recurrence monitoring.

I also believe that the time has come for telehealth. That's why I own Teladoc Health (TDOC 3.57%) stock. Teladoc is the top provider of telehealth services. It's also at the forefront of chronic disease management thanks to the acquisition of Livongo Health last year. (I was also a Livongo shareholder before the buyout, by the way.)

A big bet but not a big gamble

These are only some of the stocks that I currently own that are leading the way in bringing technological innovations to healthcare. In total, my portfolio includes 18 stocks and ETFs that are directly related to this megatrend.

I have a lot of money riding on a lot of companies in the hopes that they'll change the healthcare landscape. However, I don't consider this big bet to be a big gamble at all. Maybe not all of them will be successful, but many of them will. And if they are, my investment portfolio should have something else reminiscent of Wayne Gretzky: hockey stock growth.

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Stocks Mentioned

Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
$292.55 (3.19%) $9.05
Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
$209.67 (2.53%) $5.17
SPDR Series Trust - SPDR S&P Biotech ETF Stock Quote
SPDR Series Trust - SPDR S&P Biotech ETF
$77.06 (1.09%) $0.83
Teladoc Health, Inc. Stock Quote
Teladoc Health, Inc.
$37.17 (3.57%) $1.28
Editas Medicine, Inc. Stock Quote
Editas Medicine, Inc.
$13.47 (-0.22%) $0.03
Guardant Health, Inc. Stock Quote
Guardant Health, Inc.
$46.25 (4.03%) $1.79

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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