A decade is a long time. But it's not impossible to identify the companies best situated to grow their revenue and earnings at above-average rates over the next 10 years. It can be a worthwhile and highly profitable exercise, as the companies stand to deliver fortune-building gains.
Here are three outstanding businesses that just might fit the bill. All three are set to benefit from powerful trends in the coming decade and deliver handsome rewards to their shareowners.
1. Brookfield Renewable Partners
With climate change concerns mounting, the shift toward cleaner energy is set to be one of the most important and lucrative trends of the coming decade. Brookfield Renewable Partners (BEP 0.19%) is exceptionally well-positioned to profit from this global megatrend.
Brookfield Renewable is built to help the world achieve its energy transition and decarbonization goals. It owns a diverse collection of high-quality assets spanning wind, solar, hydroelectric, and other sustainable power projects. Its businesses are also geographically diversified, with operations across five continents.
The limited partnership is designed to pass its bountiful cash flow on to its investors via a steadily growing distribution, which currently yields over 4%. With demand for clean energy assured, Brookfield Renewable believes its investment pipeline will enable it to grow its already hefty cash payout by 5% to 9% annually and deliver total returns to investors of 12% to 15% per year.
2. Eli Lilly
With potential blockbuster drugs in three massive markets -- diabetes, obesity, and Alzheimer's -- Eli Lilly (LLY 1.19%) has an unrivaled growth pipeline among the pharmaceutical giants. Moreover, health trends suggest that the need for safe and effective treatments for these medical conditions will continue to grow as more people are expected to suffer from these disorders in the decade ahead.
Lilly's Mounjaro received Food and Drug Administration (FDA) approval in May 2022 as an injectable medicine for adults with type 2 diabetes, to be used along with diet and exercise to improve glycemic control.
Better still, the drug (also known as tirzepatide) produced promising results in a phase 3 clinical trial for weight loss. Participants in the 72-week study lost as much as 34 pounds, with more than 80% of people achieving at least a 5% reduction in body weight. Tirzepatide has multibillion-dollar sales potential in an obesity drug market that could reach $200 billion in the coming decade, according to investment bank Barclays.
Lilly has another potential blockbuster in donanemab. In a phase 3 trial, it slowed cognitive and functional decline in patients with early Alzheimer's disease by 35% compared to a placebo. Donanemab also helped to clear brain plaque that is associated with the disease, which affects more than 6 million in the U.S. alone.
Lilly's well-stocked drug portfolio should allow it to generate impressive sales and profit growth -- and, by extension, strong returns to shareholders -- in the years ahead.
3. Tesla
Tesla (TSLA -1.11%) is another exceptional business that's poised to benefit from multiple megatrends. The first, of course, is the shift from gasoline-powered cars and trucks to electric vehicles (EVs). As the industry leader, it stands to profit from the rapidly rising adoption of battery-powered vehicles more than any other company.
Profitability is improving as it scales up its production. The automaker's high operating margins are enabling it to reduce the prices of its vehicles to boost sales. This should help Tesla progress toward its goal of producing 20 million EVs per year by 2030, up from less than 1.4 million in 2022.
An intensifying focus on software could drive profit margins even higher in the coming years. Cathy Wood's Ark Investment Management believes advances in autonomous driving technology will create an $11 trillion market opportunity by the end of the decade. Tesla is investing aggressively in self-driving tech and is well-positioned to be a leader in this potentially enormous industry.
It also stands to benefit from the automation trend. The company unveiled its humanoid robot concept, called Optimus, at its AI Day event in September. It intends to develop and eventually mass-produce an AI-powered robot that can take on "dangerous, repetitive, and boring tasks," according to CEO Elon Musk.
The project is a priority for Musk, who believes Optimus could become the most valuable portion of the business in time. With such intriguing growth opportunities in EVs, self-driving software, and robotics, Tesla gives its shareholders many ways to win.
