As a long-term investor, I’m a big fan of ‘thematic’ investing. By identifying powerful long-term megatrends that are likely to have a huge impact on the world in the years ahead, I can position my portfolio to capitalise.
Here, I’m going to highlight two ‘megatrend’ stocks that I’m very bullish on right now. I own both of these stocks myself, and I expect them to power my portfolio higher in the years ahead.
Poised to benefit from ‘The Great Resignation’
First there’s Upwork (NASDAQ: UPWK), which is listed in the US. It operates the world’s largest work marketplace, connecting millions of businesses with independent talent from around the world.
The megatrend I expect Upwork to benefit from is what’s known as ‘The Great Resignation’. This is an ongoing trend in which employees are resigning from their nine-to-five jobs en masse in an effort to gain a better work/life balance and have more flexibility in their lives. According to a study by Adobe, the exodus is being driven by Millennials and Generation Z, who are more likely to be dissatisfied with their work.
This trend should play right into Upwork’s hands. Using its platform, freelancers from a broad range of industries, including software development, graphic design, accounting, writing, legal, and business consulting, can gain short-term work. It’s a win-win situation. Businesses can save on costs by hiring freelancers, while freelancers can make decent money without having to work nine to five.
Upwork’s latest results showed that the company is growing at a healthy rate at present. For the final quarter of 2021, gross services volume (GSV) was up 35% year on year to $980m. Meanwhile, revenue was up 29% year on year to $136.9m.
It’s worth noting that the firm is investing heavily for growth, so it’s unprofitable at present. Given the lack of profitability, this stock could be very volatile.
However, I’m comfortable with short-term price volatility. In the long run, I expect this company to get much bigger. I think the long-term growth potential here is enormous.
A global megatrend that has a long way to go
The second stock I want to highlight is Visa (NYSE: V), which is also listed in the US. A large-cap financial technology (FinTech) company, it operates the world’s largest electronic payments network, connecting consumers, businesses, and banks in more than 200 countries.
The megatrend I expect Visa to benefit from in the years ahead is the global shift from cash to electronic payments. In recent years, we’ve seen a huge shift in the way consumers pay for goods and services, with billions of transactions made digitally. We could still be in the early days of this trend, however. In some countries such as India and Mexico, cash is still used in more than 80% of transactions today. It’s worth noting that experts expect the global digital payment market to reach $12.5trn by 2027, up from $6.7trn in 2021. This should benefit Visa.
Of course, one risk here is new innovations in financial technology. Crypto is an example. Some people believe that crypto networks could potentially replace the credit card networks. This is certainly a risk I’m keeping a close eye on.
However, I’m very bullish on Visa. With the stock currently trading at around 30 times this year’s forecast earnings, I think it’s a great time to build my position.
The post 2 ‘megatrend’ stocks to buy today appeared first on The Motley Fool UK.
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Edward Sheldon owns shares in Upwork and Visa. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
