Where investors can find the key to long-term growth

Professional investor David Older of Carmignac highlights three promising companies with large and expanding markets for their products, and a profitable outlook.

Today’s low-growth macroeconomic environment makes it very hard for investors to find growth companies with a profitable outlook. Our approach consists of identifying trends disrupting traditional business models in order to find promising secular, or long-term, growers. We thus develop a multi-thematic portfolio invested across sectors and geographies. 

We seek out companies with large and expanding markets for their products and services and an opportunity to penetrate those markets. We are very conscious, however, that most of the available information is already encapsulated in the stock price. We therefore try to develop a view that diverges from the consensus.

Covid-19’s boost to e-commerce 

JD.com (Hong Kong: 9618) is one of the leading e-commerce players in China. E-Commerce is a typical example of the disruptive trends we focus on. With the Covid-19 virus and related lockdowns, adoption rates have strongly increased, as people have been reluctant to visit shops. 

However, overall e-commerce penetration rates are still low, especially in developing countries. We are therefore not only invested in the major US players. In China, JD.com has built a reputation around quality, authenticity and delivery. 

Furthermore, the company owns all its warehouses and logistical infrastructure. This is a competitive advantage as it ensures a top-quality delivery service while enabling the company to maintain control over its own delivery chain. The upshot has been that JD.com has been able to take significant market share in China during the Covid-19 lockdown period.

Disrupting the payment industry

The Netherlands’ Adyen (Amsterdam: ADYEN) provides a single payment platform to accept payments on mobile phones and at the point of sale. Electronic payments are another example of a disruptive trend where we invest across the value chain. The segment is experiencing significant growth driven by e-commerce and new habits consumers have developed. 

Growth is also being driven by measures being taken to avoid the spread of Covid-19; the need to limit physical contact when shopping is leading to greater use of electronic payments. Adyen’s business is centred on a single purpose-built global IT platform, originally only for e-commerce for large global enterprise clients. Its IT platform is now widely considered to be best-in-class in the sector. We also like the fact that the company is owned and managed by the founder himself. 

Healthy returns from healthcare

Healthcare is another appealing segment of the market. The industry is ever evolving, while the ageing world population is also fuelling growth. Centene (NYSE: CNC), a managed-care company, provides health insurance in the US. It is the largest player in the market for Medicaid, the US health insurance system that provides a safety net for those on low incomes. 

Centene is currently making sure that the newly unemployed still have access to healthcare. Its diversification into the faster-growing Medicare Advantage business (a part of the federal health-insurance programme) and its significant scale enable the company to remain competitive in a rapidly changing market. 

Recommended

High street giant HSBC to close 114 branches
Personal finance

High street giant HSBC to close 114 branches

HSBC is to shut the doors of 114 branches as more customers switch to online banking.
30 Nov 2022
House prices expected to fall by 5% in 2023
House prices

House prices expected to fall by 5% in 2023

House prices could fall by 5% next year as rising mortgage rates weigh on buyer demand.
30 Nov 2022
The best offers for switching banks – get up to £200 free cash
Personal finance

The best offers for switching banks – get up to £200 free cash

Looking to move bank accounts? You can now bag as much as £200 for switching current accounts from two major banks
30 Nov 2022
Stock market crash? This time it’s (slightly) different
Stockmarkets

Stock market crash? This time it’s (slightly) different

The bears expecting a stock market crash have got it wrong, says Max King.
30 Nov 2022

Most Popular

Wood-burning stove vs central heating ‒ which is cheapest?
Personal finance

Wood-burning stove vs central heating ‒ which is cheapest?

Demand for wood-burning stoves has surged as households try to reduce their heating costs this winter. But how does a wood burner compare with central…
29 Nov 2022
Fan heater vs oil heater – which is cheaper?
Personal finance

Fan heater vs oil heater – which is cheaper?

Sales of portable heaters have soared, as households look to cut their energy costs. But which is better: a fan heater or an oil heater? We put them t…
21 Nov 2022
Best regular savings accounts – November 2022
Savings

Best regular savings accounts – November 2022

You can earn an attractive rate on the best regular savings accounts. We tell you the best on the market to take advantage of right now
29 Nov 2022