As 2016 approaches many investors will ask what shares and sectors offer potentially the best returns in the years ahead.
In my opinion not much has changed on that front since I penned my very first article for The Motley Fool back in May 2013.
It was titled Australia’s digital economy set to take off and concluded:
“The transformative effects of the digital economy will be many and profound. A whole new layer of infrastructure will be required to support the government-backed digital economy, and over the long-term companies that can capitalise on this are perfectly positioned to outperform the market.”
The referenced article recommended two businesses in TPG Telecom Ltd (ASX: TPM) and M2 Group Ltd (ASX: MTU) due to their leverage to the internet and cloud services, since the start of 2013 their shares are up 280% and 173% respectively, with bright outlooks still based on the digital economy.
For investors the potential of the digital economy is just getting stronger as online connectivity and its global possibilities continue to promise revolutionary shifts in how businesses make money.
In 2015 Deloitte valued Australia’s digital economy at $79 billion, or 5.1% of GDP, which according to the consultants is now bigger than industry sectors like retail, agriculture and transport.
For investors the key is to find the businesses best positioned to keep growing their share of the digital economy, and not just in Australia but globally.
This is no secret, but it’s surprising how many investors still like to buy old world stocks like BHP Billiton Limited (ASX: BHP) over fast-growing and globally focused digital businesses like SEEK Limited (ASX: SEK) or REA Group Limited (ASX: REA).
While these businesses continue to offer strong long-term prospects, the really big winners will be the SEEK’s and REA Group’s of tomorrow not today.
Motley Fool contributor Tom Richardson owns shares of REA Group, 3P Learning Ltd, M2 Group Ltd and My Net Fone Limited.
You can find Tom on Twitter @tommyr345
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks 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.