How to find tomorrow’s winning stocks today

Professional investor Colin McLean of SVM Asset Management highlights picks eight promising stocks for investors to buy for the long term.

Where can tomorrow's industries be found on the stockmarket? Today's sectors represent past success; future consumers' needs will be met by new technology and business structures. Some of these emerging areas will already be listed on the stockmarket, but typically in small and medium-sized firms that are easily overlooked. For some, the edge is in technology, but more often change comes from disruptive business models using capital differently, or offering innovative customer services.

Once a few businesses have listed in a subsector, analyst research and interest from investors gradually builds up. It becomes easier to see a pattern to the change. Then each additional listing adds credibility to the subsector. This can lead to a re-rating as investors gain a clearer picture of the new business models and growth prospects. Interesting areas include challenger banks, student accommodation and legal services. In each sector a competitive edge allows the new businesses to disrupt the incumbents.

Shaking up lazy lawyers

All these changes have spawned new businesses, such as Burford Capital (Aim: BUR), Manolete Partners (Aim: MANO), Keystone Law Group (Aim: KEYS) and Knights Group Holdings (Aim: KGH). Keystone and Knights are growing organically and by acquisition. Burford focuses on financing major US cases, where litigation can take years. Manolete addresses the need for company administrators to value claims. It has identified opportunities in pursuing claims against companies and their directors.

Student housing is a growth area

Unite Group (LSE: UTG)

Watkin Jones (Aim: WJG)

Bank on new banks

OneSavings Bank (LSE: OSB)

Charter Court Financial Services Group (LSE: CCFS)

Recommended

Beyond US tech stocks: three global stars to buy now
Share tips

Beyond US tech stocks: three global stars to buy now

There is much to like about the US tech giants, says professional investor Alec Cutler of Orbis Investments highlights. But there are many other excel…
1 May 2021
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
19 Feb 2021
Cinema stocks: a happy ending at the box office
Share tips

Cinema stocks: a happy ending at the box office

Cinemas have been battered by lockdowns and the surge in streaming options. But don’t write them off, says Tim Dams
17 May 2021
Do well by doing good with these three socially responsible stocks
Share tips

Do well by doing good with these three socially responsible stocks

Professional investor Yasmine de Bray of CPR Asset Management picks three sustainable and socially responsible stocks that should produce stable retur…
17 May 2021

Most Popular

How will Joe Biden’s capital gains tax rise affect crypto prices?
Bitcoin & crypto

How will Joe Biden’s capital gains tax rise affect crypto prices?

The US president wants to increase capital gains tax – and that’s going to hit a lot of American cryptocurrency speculators. Saloni Sardana looks at h…
14 May 2021
US stocks look expensive – here’s what to own instead
Investment strategy

US stocks look expensive – here’s what to own instead

Right now, US stocks are among the most expensive in the world. So if you want a decent return on your investments, you should look into diversifying …
17 May 2021
Inheritance tax planning: the rules around gifting
Inheritance tax

Inheritance tax planning: the rules around gifting

There are plenty of legal ways to minimise an inheritance tax bill. Perhaps the simplest is to give away assets to reduce the size of your estate. Dav…
11 May 2021