It is easy to get caught up in the everyday way of living, but individuals who open up their minds to new and exciting trends put themselves in an excellent position to profit over the long term. While I highlighted two potential "Megatrends" shaping our future in this article, here are three more megatrends which investors could potentially profit handsomely from.
Oil Slump
Oil prices have recovered somewhat in recent months after more than halving in value earlier in the year. Despite the recent recovery however, there is a good chance prices will remain subdued over the coming years due to growing supplies and waning global demand.
Of course, this isn't good news for the companies which produce the resource, given that they rely on higher prices to increase profits and to justify new projects. But it is good news for companies which require oil in their everyday operations where oil is often considered a major expense.
Indeed, that's been demonstrated by companies such as Qantas Airways Limited (ASX: QAN), which has risen nearly 140% over the last 12 months. Although I wouldn't suggest investors buy Qantas, or any other airliner for that matter, there are a number of other companies that are also set to benefit.
Instead, investors could look towards companies such as Lindsay Australia Limited (ASX: LAU) or Automotive Group Holdings Ltd (ASX: AHG). As both companies maintain operations in the transportation of refrigerated foods, lower fuel costs could lead to greater profits.
Interest Rates
Some investors would argue that this megatrend has already played out, but I would have to disagree. Australia's cash rate has fallen from more than 7% prior to the Global Financial Crisis to a record low of 2% today. Indeed, many economists believe that the RBA will need to cut interest rates at least once more – if not twice – but even if it doesn't, low interest rates are here to stay for the foreseeable future.
While local investors have recognised enormous profits from dividend-paying stocks such as Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC) over the years, I would suggest that these companies have become somewhat overpriced for long-term investors. As such, you could instead look at alternatives like Woolworths Limited (ASX: WOW) and Collection House Limited (ASX: CLH) which offer generous fully franked dividends and remain attractive bets at today's prices.
Technological Innovation
With how far we have come technologically over the last decade or so, it's difficult to grasp how we could possibly continue advancing. But there's a trend at play known as the "internet-of-things" which will see everyday devices, such as fridges and cars, connect to the internet to communicate with one another.
Although Australian investors are somewhat limited in their ability to invest directly in the companies leading this revolution, they can invest in the companies which will make it all possible. Indeed, the services provided by Australia's telecommunications companies will be required to cater for the data explosion.
While Telstra is the obvious example, given that it is the nation's biggest provider of broadband services, investors could also look towards companies such as M2 Group Ltd (ASX: MTU) and TPG Telecom Ltd (ASX: TPM). Notably, these companies will also benefit from other trends such as the rise of online streaming services (i.e. Netflix, Stan, etc.).
Speaking of technological innovation, The Motley Fool's top analysts have recently named two small-cap tech superstars which could generate enormous returns over the coming years.
