2 “Megatrends” that every investor needs to know about

CSL Limited (ASX:CSL), Healthscope Ltd (ASX:HSO), Transurban Group (ASX:TCL) and Brickworks Limited (ASX:BKW) are all well placed to benefit from these potential “megatrends”

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It’s hard to believe how much the world has transformed over the past decade.

Ten years ago, the idea that Google could become so popular that it would be classified as a verb was almost unthinkable, as was the idea that we could work towards driverless and fully electric motor vehicles. Meanwhile, we’ve moved towards a digital currency known as ‘Bitcoin’ and platforms such as Facebook and YouTube have revolutionised the way in which humans interact and entertain themselves.

Indeed, these are just a few simple examples of how far the human race has evolved over the last decade and are a testament to the rapid pace at which we can experience change, both socially and economically.

An entrepreneurial opportunity

As human beings, it can be so easy to get swept up in everyday life, taking for granted the way in which we do things to focus on the immediate future rather than opening our eyes to new and exciting ideas and concepts.

That is especially the case in the investing world where individuals pay so much attention to the short term, focusing on the everyday ups-and-downs of the market (and letting emotions control their every move) rather than looking at the driving forces behind significant changes that could well shape our future. Similarly, many investors forget to think about the opportunities that are right there in front of their eyes, just waiting to benefit from changes that will inevitably occur.

But for those entrepreneurial individuals who do pay attention to these so-called “Megatrends”, such revolutionary changes can equate to massive opportunities that have the potential to make those who get in early enough enormous profits.

Believe it or not, while investors have unfortunately missed out on the rapid rise of trends such as Google and Facebook and potentially even Bitcoin, there are actually a number of megatrends at work right now which will likely change the world as we know it over the coming years, and even decades.

Here are two of the big megatrends I believe are currently at work in our society, and the threats and opportunities that they present.

Ageing population

The Australian population is ageing by proportion – a result of sustained low fertility and increasing life expectancy – which will have a profound impact on the Australian economy as a whole. According to the Australian Bureau of Statistics, otherwise known as the ABS, the proportion of the population aged 65 years and over increased from 11.8% to 14.7% between 1994 and 2014, and that age group is tipped to increase rapidly over the next decade.

Indeed, this has implications for the global economy in that there will likely be slower growth in the labour force and a greater strain on governments to support them in their retirement. But this trend could be a boon for companies operating in the healthcare sector, such as Healthscope Ltd (ASX: HSO), Ramsay Health Care Limited (ASX: RHC) and CSL Limited (ASX: CSL), which could see an uptick in demand for their services.

Aged care facility operators such as Japara Healthcare Ltd (ASX: JHC) and Estia Health Ltd (ASX: EHE) are also well placed to benefit.

Growing Population

While Australia’s population is aging, it is also expected to continue expanding over the next century. Data from the ABS shows that Australia’s population was sitting at 22.7 million people as at 30 June 2012, having grown at a rate of 1.5% per annum over the previous decade.

The ABS’s website shows that we’re currently sitting at roughly 23.851 million people, implying a compounded annual growth rate (CAGR) of 1.66% over the last three years. Although the growth rate is expected to decline over time, the statistics bureau still estimates that our population will balloon to as many as 48.3 million residents by 2061, and up to 70.1 million residents by 2101.

Right now, our available infrastructure is not capable of satisfying those enormous demands, so obviously more will need to be constructed. That could be great for companies such as Brickworks Limited (ASX: BKW) and its major shareholder, conglomerate Washington H. Soul Pattinson Co. Ltd (ASX: SOL), and even for companies such as Transurban Group (ASX: TCL), which would experience greater traffic numbers on its roads.

Watch this space for three more megatrends later in the day, but in the meantime…

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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*Returns as of January 12th 2022

Motley Fool contributor Ryan Newman owns shares of Facebook and Collection House Limited. You can follow Ryan on Twitter @ASXvalueinvest. The Motley Fool Australia does not own shares in any of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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