It takes quality, enduring companies to build a good investment portfolio. But where should investors begin their search? One idea is to start with underlying secular trends positioned to drive strong growth for businesses in a given niche or industry. Identifying these tailwinds could ultimately point investors to compelling companies with strong growth potential.
Of course, an approach like this has its drawbacks. Namely, stocks in hot and fast-growing segments tend to trade at pricey valuations. But for investors willing to hold stocks for five or more years, a premium valuation today for a stock in a fast-growing niche might be worth it.
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