Author: Todd Campbell | February 19, 2019
Which industries will be most newsworthy this year?
It’s been shown time and time again that long-term investing outperforms investing based upon the stock market’s daily pops and drops. Knowing the industries likely to surge or swoon can help you figure out what stocks are best to buy or sell. Are you ahead of the curve? Here are eight industry trends it may pay to be on top of in 2019.
No. 1: 5G becomes a reality
We’re on the cusp of the fifth generation in wireless transmission technology, or 5G. We’ve already seen pilot launches of 5G networks by AT&T (NYSE: T) and Verizon (NYSE: VZ), but the first significant 5G rollouts are expected in 2019. 5G could transform communication because it will be able to move more data faster and connect more devices simultaneously. Like 4G, though, it could be years before applications that make the most of 5G appear. Nevertheless, the 5G revolution is upon us and it could pave the way to significant returns for investors in companies targeting it, including semiconductor and wireless-enabler Skyworks (NASDAQ: SWKS).
No. 2: Smart(er) cars are coming
Cars that park themselves, come when called, and drive autonomously are the future and it’s not just Tesla (NASDAQ: TSLA) that’s poised to profit from them. Yes, Tesla’s at the forefront of the automotive technology revolution, but General Motors (NYSE: GM) has its own significant programs underway, including a self-driving taxi program that’s expected to see a widespread roll-out in 2019. Self-driving, technology-packed cars could disrupt this industry, so 2019 could be the right time to take closer look at automakers and the technology companies that are supplying them.
No. 3: Marijuana mayhem continues
The United Nations thinks the global marijuana market is worth $150 billion, but only $11 billion of that spending occurs in countries or states where marijuana is legal. The potential associated with shifting this spending out of the shadows is massive, especially if legalization leads to new consumer goods products, such as beverages.
Canada’s medical marijuana market has been operating successfully for years and a national recreational market for adults opened in Canada last fall. Canada’s market could be worth $12 billion someday, but the real prize is America, where $50 billion is spent on marijuana annually. So far, 33 states have legalized medical or recreational marijuana and since Gallup reports 66% of Americans support legalization, national legalization could only be a matter of time. If barriers continue to fall, this industry could rival the tobacco or alcohol industries, causing sales at cannabis companies like Canopy Growth (NYSE: CGC) to skyrocket.
No. 4: The War on Cash escalates
If you’re using your smartphone to pay for your coffee, swiping a credit card at a craft show, or spending money online, you’re not alone. The war on cash has intensified over the past few years as companies like Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) revolutionize how money changes hands. That disruption will continue as person to person transfers win more users and even more money is spent on e-commerce in 2019. Despite double-digit year-over-year growth, e-commerce still represents less than 10% of total retail spending and according to American Express (NYSE: AXP), credit cards only make up about $12 trillion of the $29 trillion spent by consumers, so there’s plenty of runway left for this industry.
No. 5: Bispecifics become biotech’s next big thing
A new approach to battling cancer with bispecific antibodies could capture everyone’s attention in 2019. Bispecific biologics bind to two different targets at one time, potentially improving the likelihood a patient’s immune system spots and destroys cancer cells. Studies evaluating bispecifics are only in the early stages, but results are impressive so far.
In December, Regeneron Pharmaceuticals (NASDAQ: REGN) reported its bispecific, REGN1979, delivered a 100% response rate in eight patients with relapsing follicular lymphoma. Regeneron isn’t the only biotech company betting on this approach, either. Bispecific antibody research is also advancing at Roche Holdings (NASDAQOTH: RHHBY) and Amgen (NASDAQ: AMGN), two of the largest biopharma companies in the world. If studies confirm that bispecifics improve outcomes safely, then far more people will be aware of this approach by the end of this year.
No. 6: Customer service goes AI
Artificial intelligence is being incorporated into many solutions, but one area where it could take off this year is customer service. Companies are already turning to data-backed software solutions because customers are increasingly connecting with them electronically, and that trend is only growing. For instance, industry watcher Gartner predicts 85% of customer interactions will be handled without a human by 2020. As more people communicate with their favorite brands via messenger apps, companies that are developing customer services solutions backed by AI, including Zendesk (NASDAQ: ZEN) and Twilio (NASDAQ: TWLO), are worth watching.
No. 7: Derailing diabetes
Over 30 million people have diabetes in the U.S. alone and up to 62 million people in North America may have diabetes by 2045, according to the International Diabetes Federation.
Preventing diabetes' life-threatening progression is a major focus of healthcare companies and in 2019, new devices that help patients control their disease better could gain greater adoption. For instance, wearable monitors that continuously check a patient’s blood sugar levels are being paired with wearable insulin pumps to create automated insulin delivery systems that eliminate needle sticks and reduce the risk of dangerous blood sugar highs and lows. Tandem Diabetes (NASDAQ: TNDM) launched its automated system last year and more systems from other top diabetes companies, including Insulet (NASDAQ: PODD), are on the horizon.
No. 8: eSports goes mainstream
The idea of spending time and money watching others play video games may seem odd, but the esports industry is on the cusp of becoming a billion-dollar market. If you’re unconvinced of esports potential, simply ask any teenager how they spend their free time or Google Tyler “Ninja” Bevins, an esports pro who reportedly earns $500,000 per month. Video streaming of gameplay has been growing in popularity for years and as a result, it’s spawning a generation of professional gamers who belong to leagues that battle at eSports events. Former Activision Blizzard (NASDAQ: ATVI) executive and eSports league pioneer, Mike Sepso, estimates about 500 million people watch eSports. Given estimates that eSports revenue will reach $1.5 billion in 2020, triple its revenue in 2016, there’s plenty of reason for investors to be tuning into this trend in 2019.
Todd Campbell owns shares of Amgen, PayPal Holdings, Square, and Tesla. The Motley Fool owns shares of and recommends Activision Blizzard, PayPal Holdings, Skyworks Solutions, Square, Tesla, Twilio, and Zendesk. The Motley Fool recommends Amgen, Insulet, and Verizon Communications. The Motley Fool has a disclosure policy.