If you are investing for the long term, it's important to pay attention to industry trends and which companies are likely to still be growing years from now. While GameStop may have made some speculators rich this year, it's in a struggling industry and its future beyond a few years is questionable, at best.
There are better, more exciting and growing industries to invest in, including robotics, artificial intelligence, and gaming. These industries have huge potential, and three stocks that can give you some great exposure to them include Intuitive Surgical (ISRG -0.41%), C3.ai (AI 1.31%), and Activision Blizzard (ATVI). Here's why your future self will likely be giving you the thumbs-up if you decide to invest in these stocks today.
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1. Intuitive Surgical
A great way to bet on the future is to invest in robotic-assisted surgery. Intuitive Surgical's da Vinci surgical systems help doctors operate on patients with greater precision and reach narrow areas. Robotic surgery is still in its early stages, but analysts from ResearchAndMarkets project that this market will grow at a compounded annual growth rate (CAGR) of more than 22% over the next few years, reaching a value of $8.2 billion by 2025.
As of Intuitive's fourth-quarter results, which were released on Jan. 21, the install base of da Vinci systems totaled 5,989 as of Dec. 31, 2020 -- up 7% from the previous year. Although Intuitive isn't doing as well as it could be due to the pandemic and hospitals deferring procedures, in Q4, the total number of da Vinci procedures still rose 6% year over year. What's encouraging for investors is that even though Intuitive is still in its early growth stages, the business is already profitable. On $4.4 billion in revenue last year, the company netted a profit of $1.1 billion -- roughly a quarter of its top line.
In the past year, the healthcare stock has risen more than 20%, outperforming the S&P 500 and its 16% gains over the same time frame. However, that could be a drop in the bucket considering the long-term potential for the company and the profits you may make by holding onto this stock for years.
2. C3.ai
Another futuristic investment is in artificial intelligence (AI). And one company that can help various industries upgrade their capabilities is software provider C3.ai. It has a variety of applications that can help utility providers with predictive maintenance and energy management. Even in an industry where automation may not be all that obvious, like banking, C3 has algorithms that can help flag suspicious transactions and play a critical role in a bank's anti-money laundering strategy. According to Grand View Research, the market for artificial intelligence will continue to grow at a CAGR of more than 42% until 2027.
In its most recent fiscal year, C3.ai generated sales of $157 million -- a 71% increase from the previous year. However, the company's CEO did warn when it went public in December 2020 that due to the pandemic, it won't be able to sustain that level of growth. But he did say that the business "will grow at a pretty good clip."
C3.ai is a long-term hold, and while its growth may fluctuate in the foreseeable future, this is a stock that could set your portfolio up for some impressive gains. Since the stock began trading on Dec. 9, 2020, C3.ai's shares have risen 39%, outperforming the S&P 500, which is up 6% over that period.
3. Activision Blizzard
The gaming industry isn't growing as quickly as the robot-assisted surgery or AI markets are. However, according to Newzoo, which analyzes and works closely with the sector, the global games market will grow at a CAGR of 9.3% over the next few years, and it will reach a value of more than $200 billion in 2023.
But even beyond that, gaming isn't going anywhere. Micro-transactions and in-app purchases are making it easier for companies like Activision to squeeze out more in revenue for their games. The days of just paying one time for a video game are long over, especially for online games that require ongoing subscriptions.
In its full-year results for 2020, Activision reported net sales of $8.1 billion, which grew 25% from the previous year. And of the company's top line, just 29% of it came from product sales, with the bulk of revenue coming from subscriptions, in-game purchases, and other items. Its profits for the year totaled $2.2 billion and were up 46% year over year.
Activision is doing well, and the path for its growth may actually get easier, not harder. Its latest move involves reviving a 20-year-old game, Diablo II, and upgrading the graphics and making it available to a new generation of gamers.
With some great growth numbers already and still lots of potential in the years ahead, Activision is another stock that you can buy and hold for the long haul. In the past year, its shares are up over 53%.
