The following three stocks are from very different industries, but their characteristics demonstrate resilience throughout economic cycles, and each is driven by long-term growth themes in our framework of three megatrends: demographic changes, future of technology, and resource scarcity.
Ferrari’s growth driver
Ferrari (Milan: RACE) has a well-known brand, enviable pricing power and a loyal customer base built on a strong franchise. Many of its cars sell out before production even begins.
Ferrari is well positioned to benefit over the next decade from the growth of the middle class in emerging markets, where the number of high-net-worth individuals is increasing most rapidly. In the electric-vehicle sector, Ferrari has entered the hybrid market. Its first hybrid car, the SF90 Stradale, was the company’s best-selling model until the recent launch of its SUV. The group is aiming to unveil its first fully electric model in 2024.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Most of Ferrari’s revenue and profits come from the US and Europe. However, the company is growing its presence in emerging markets, especially China. The new Purosangue SUV is a step towards expanding its business in the Chinese luxury-vehicle market, where both luxury and comfort are in demand. Consumers’ interest in the SUV has far exceeded initial expectations, with a rapidly lengthening order book.
Linde: the link to a low-carbon future
Industrial gases are essential across many sectors, and Linde (Frankfurt: LIN) is a global leader in this field. This diversity of markets can provide stability in volatile economic cycles, as we have seen recently. Furthermore, the company is seeking to diversify into markets that are less exposed to the vagaries of the global economic backdrop. These include healthcare and the food and beverage sectors. For instance, Linde was a significant supplier of medical-grade oxygen during the emergency phase of the pandemic.
A major player across the entire hydrogen value chain, Linde looks ideally positioned as its customers seek low-carbon energy sources. This is a long-term opportunity, likely to give the company a fillip into the late 2020s. As the opportunities will be capital-intensive, forming partnerships will be the key to success. Linde is already one of the largest operators in green hydrogen, using electrolysis technology powered by renewable energy sources such as wind or solar.
It currently operates 80 hydrogen electrolysers in a joint venture with ITM Power.
Ahead in the cloud
Microsoft (Nasdaq: MSFT) is a firm that demonstrates leadership in technology and is developing practical applications in the realms of cybersecurity, gaming and new areas of artificial intelligence (AI).
With more and more corporate assets migrating online, demand for cloud services has increased. This can also heighten susceptibility to cyberattacks. Microsoft’s cloud services are one of its fastest-growing segments, with the Azure Cloud business recently topping the firm’s sales growth across all divisions.
In the gaming sphere, its “Game Pass” offers online access to PC and Xbox games. At the end of 2022, PC Game Pass subscriptions had increased by 159% year on year, with 20 million people now using the service to stream games. Microsoft is also well positioned to capture the rapidly increasing focus on AI, notably through its position within the enterprise market.
-
Should you sell in May this year?The market adage looks unlikely to apply in 2024, and global equities are proving resilient
-
Should you invest in UK equities?The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
-
Halifax: House price slump continues as prices slide for the sixth consecutive monthUK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
-
Pension savers turn to gold investmentsInvestors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
-
Where to find the best returns from student accommodationStudent accommodation can be a lucrative investment if you know where to look.
-
Best investing appsWe round up the best investing apps. Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go?
-
The world’s best bargain stocksSearching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
-
Revealed: the cheapest cities to own a home in BritainNew research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
-
UK recession: How to protect your portfolioAs the UK recession is confirmed, we look at ways to protect your wealth.
