My name is Keith Fitz-Gerald, and for more than 35 years, I've worked in the global markets as a consultant, analyst, and trader. I cut my teeth at some of Wall Street's biggest firms, including Wilshire Associates, which oversees more than $8 trillion for over 600 institutional investors.
But now, I'm taking what I learned on Wall Street and bringing it straight to you as the Chief Investment Strategist here at Money Morning.
My team and I work tirelessly to provide our readers with the guidance they need to protect and aggressively grow their wealth and retirements, because you've worked hard, spent years providing for yourself and your family, and now you deserve to make the best of your time ahead.
Today, I'd like to focus on the central reason we're spending time together - spotting and investing in unstoppable, global, trillion-dollar trends.
For all the complicated stuff going on around us right now... ISIS, Zika, political turmoil, central banking madness... the world is actually a pretty simple place when it comes to your money. And we're going to navigate that together.
Almost nothing is ever guaranteed in investing, but the six forces I'm about to show you never lose their power to drive and transform society while moving markets in the process. That's why companies that tap into them always succeed in the long term and dramatically outperform the markets no matter what else is going on.
Let's get started.
Like most investors, you probably heard a lot about the green energy revolution when oil was flirting with $150 a barrel. But chances are, you're not hearing it now.
Conventional wisdom holds that there will be less of an incentive to invest in alternative energy now that oil's at bargain-basement prices. No doubt that's true if you're waiting for next-generation developments.
But I want to introduce you to a company that's already assembling the blend of conventional energy sources and new technology needed to profit, even if oil prices don't recover for years.
Unstoppable Trend: Energy
Energy is an Unstoppable Trend because the most powerful nations on Earth will throw all the influence it takes - be it armies, scientists, or state-of-the-art technologies - to ensure that their economies have the fuel to keep moving. And this guarantee means that anyone who invests in a solid energy company that taps into this trend will stand to make enormous profits - especially if the company is cheaply priced.
Founded in 1984 and based in Juno Beach, Fla., NextEra Energy Inc. (NYSE: NEE) is a leading clean energy company with approximately 45,900 megawatts of generating capacity serving approximately 9 million customers across the United States and Canada.
The company has four subsidiaries: Florida Power & Light Co., which is the largest rate-regulated electric utility in Florida, serving approximately 5 million customer accounts in the state, NextEra Energy Resources, NextEra Energy Partners, and NextEra Energy Services. NextEra Energy Resources LLC, together with its affiliated entities, is the world's largest generator of renewable energy from the wind and sun.
The company has one of the most diversified blends of capacity generation among its peers, with 52% of its capacity fueled by gas (which is abundant and very cheap), 27% from nuclear, 18% from renewables (such as wind and solar), and just 3% from coal.
To put that in context, utility heavyweights such as FirstEnergy, American Electric Power, and Duke Energy rely on coal for approximately 50% of their energy. That will leave them flat-footed as Washington pushes for cleaner energy solutions.
The company expects to invest approximately $15 billion before the end of 2019 to add both wind and solar capacity.
Additionally, the company has eight nuclear units at five plant sites located in Florida, New Hampshire, Iowa, and Wisconsin. These facilities have the ability to generate in excess of 6,600 megawatts of emissions-free electricity. That's enough supply to meet the needs of almost 5 million households.
NEE reported stellar strong earnings for Q3 2018, beating analyst estimates and pushing share prices up more than 10.6% for the year, outperforming the S&P 500 by 7.5%. Moreover, the company continues to expect to grow its dividends per share 12% to 14% per year through at least 2020, off a 2017 base of dividends per share of $3.93.
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With sturdy finances and a diversified portfolio of energy holdings, I can't think of a better play to profit from the renewable energy revolution - and collect generous and growing quarterly income while you watch it unfold.
Scarcity and allocation is the trend that's front and center when it comes to global resources becoming more strained than ever before. By 2025, 1.8 billion people will suffer from extreme water scarcity, according to FEWResources.org, while scientists predict that food shortages will become as politically destabilizing as energy shortages are today by mid-century, as the world's population approaches 9 billion...
Which brings me to American Water Works Co. Inc. (NYSE: AWK).
The company recently reported Q4 2018 earnings, which represented an 11.1% increase from the comparable quarter a year prior.
During the quarter, the company received a unanimous five to zero vote for its Monterey, Calif., Penisula Water Supply Project, which includes both water reuse capabilities and a desalination facility. This project is expected to generate revenue in excess of $490 million over the duration of the contract period of 50 years.
The company also secured clarifying legislation to exempt water and wastewater utilities from the 2018 New Jersey tax law changes and continues to have strong regulated customer growth. To date, AWK has welcomed about 16,500 new customer connections through closed acquisitions and organic growth, and has an additional 56,000 customer connections under agreement for acquisition in 2019.
Additionally, the company announced at its earnings conference that its Military Services Group won a 50 year, $591 million contract to serve Fort Leonard Wood army base in Missouri.
I was particularly excited to see the company discontinued the very small water trucking business it was holding onto and announced an exit from the construction business. Conventional analysts don't often call something like that out, but it's an important metric for the simple reason that you have to get rid of anything that is simply too small and volatile for the management time that it consumes.
The company is a "buy" for three very simple reasons.
Earnings continue to grow nicely, as does the company's cash flow.
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But we're not talking about just any water company here. American Water Works is the single largest and most geographically diverse operator and serves more than 15 million people in 47 states and Canada. Moreover, the company is investing $8.4 billion to $9 billion over the next five years with more than $7.2 billion spent to improve its existing infrastructure.
Dividends and income are growing at a compound annual rate of 10.1%. And, as if that's not reason enough, the company's debt is rated an "A," which gives it room to grow and access to plenty of future funding if needed.
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Plus, subscribers to the Money Map Report had the opportunity to score a 201.68% windfall on AWK already. But it's not too late to get in on the action, and we'll be following this company for the long haul. Click here to learn exactly how you can get in on this lucrative investment.
Thanks to people like the Kardashians (who I like to call the “Kartrashians”…), there’s a social media phenomenon moving across the world, to regions it’s never been in before.
Of course that makes most people think of the obvious social media companies – Facebook, Twitter, LinkedIn – but it’s also important as investors to think about what this global shift to social media is doing to our lives.
Unstoppable Trend: Medicine
Healthcare spending in the United States is expected to jump 5.8% between 2015 and 2025, far outpacing GDP growth for the same period and totaling more than $10,345 per person each year. According to the Institute for Health Metrics and Evaluation, global spending on health is expected to reach $18.3 trillion worldwide by 2040.
When you do that, you’ll see there’s one huge change social media is bringing: Everyone now has this overwhelming need to look good. This obsession with selfies and posting pictures means people are paying money to be camera-ready at all times. Everyone wants to look good on Facebook, Instagram, Snapchat, whatever social media channel they choose.
Heck – you can barely walk down the street without seeing someone taking a selfie. So like I said, thanks to social media there’s now a massive global pressure for everyone to look like a million bucks. And that’s showing up in the numbers for one company especially. It just reported record revenue in Q2, up 37.5% year over year. And its Q2 diluted earnings were up 52.9%.
Enter the Align Technology (NASDAQ: ALGN).
You might have heard of it in your dentist’s office. This company is the leader in fixing teeth. And that’s huge now that having cosmetically perfect teeth is a priority for the first time – and not just in the United States, but all around the world.
Align has revolutionized the way orthodontics are performed. It designs and manufactures the Invisalign system – the most advanced clear aligner system in the world.
It has a 100% digital approach. It lets doctors digitally scan a patient’s mouth in just one minute to get a more accurate read out on how to correct the issues – much more accurate than the typical bite-down model – and uses the world’s largest 3D printing operation. And the cost to patients is far lower than what they’d pay for traditional orthodontics.
About 80% of all orthodontic cases in the next 10 years can be treated with Align’s technology. To put that into numbers – they have a target base of 300 MILLION patients.
The company has been operating for 21 years and has 430 patents, which means it has a huge moat.
Like I touched on earlier, their quarterly numbers are rising 30-50% year over year. And here’s the key: They just shipped their MILLIONTH Invisalign technology to the Europe/Middle East/Africa region.
Most people are aware of how technology powers some new businesses and ruins others. But most investors don't understand how to play this trend because they're all too often chasing the latest gadgets and gizmos, rather than the true innovations...
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Unstoppable Trend: Technology
Technology can transform markets. Simply put, the Technology Trend is how new information, medical treatments, scientific innovations, and progress in society revolutionize products, and, therefore, businesses and ultimately economies. Technology's influence can be seen in virtually every company on the planet - whether it's helped it or diminished it, ruined it or made it a leader in the industry.
...which brings me to one company that's intrinsically tapped into almost every technological growth sector coming our way: Alphabet, Inc. (NASDAQ:GOOGL).
Alphabet recently reported Q2/2018 revenue and earnings of $32.66 billion and $11.75 per share (excluding fines) which represent year-over-year increases of 25.55% and 32.02%, respectively.
For the quarter, the company’s "Advertising" revenue grew 23.97% to $28.09 billion, "Other Revenue" (which includes Cloud, HW, and Play) grew 36.53% to $4.42 billion, and "Other Bets" grew 40% to $145 million.
It’s no surprise that the company’s advertising segment (powered by one of the most advanced Artificial Intelligence engines in existence anywhere in the world today) grew at the rate it did – but it’s the "Other Revenue" that has me excited because it demonstrates the company’s ability to be more than one-trick pony.
During Q2, Domino’s Pizza, SoundCloud, PricewaterhouseCoopers, Target, Air Asia, Carrefour, and Itau Unibanco, brought all, or part, of their respective operations onto Google Cloud. You can bet those names got Amazon.com Inc. (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT)’s attention because it means Google Cloud, which is currently number three (as a percentage of public cloud market market share), is gaining traction and poses a real threat to eating away at Amazon and Microsoft’s leadership.
This is an important development – the public cloud stuff, I mean – because the total market for public cloud services will grow by nearly 100% in just a few years, from $153.5 billion in 2017 to $302.5 billion by 2021, according to Gartner.
I know prices are still “expensive” at over $1,000 a share, but don’t let that throw you.
This is the trend that my readers tend to be least likely to invest in, for obvious reasons. I can't say I blame them. It's my least favorite trend, too, both personally and professionally.
But war, terrorism, and ugliness isn't going away. The trend encompasses the worst aspects of humanity's trajectory - armed conflict, terrorism, cybercrime, and espionage, as well as increasingly sophisticated international threats like biological warfare and politically destabilizing forces like ISIS.
As investors, we can't afford to ignore the terrible reality that the world isn't getting safer. Instead, it's better to acknowledge the power that war, terrorism, and ugliness have to shape markets.
Unstoppable Trend: War, Terrorism, and Ugliness
With cybercrime on the rise - costing the global economy a projected $2.1 trillion this year - and with ISIS on the march while Putin flexes his military muscle, it's sadly clear that this trend is picking up speed at least as quickly as the other five.
Founded in 1922 and based in Waltham, Mass., Raytheon Co. (NYSE: RTN) provides government markets around the world with state-of-the-art electronics, mission systems integration, and other weapons capabilities.
Believe it or not, the company’s original focus was on refrigeration technology. But its first product was a revolutionary little vacuum tube that allowed radios and other small appliances to plug into an electricity grid (sound familiar?), eliminating the need to use expensive, short-lived batteries in everything.
Raytheon next distinguished itself with the discovery of microwave cooking in 1945. It soon moved into – and began to dominate – radar systems, missiles, satellites, aircraft, and even spacecraft.
Today, Raytheon is the fourth-largest U.S. defense contractor (by revenue), as well as the world’s largest producer of guided missiles. It has six business segments and more than 30 product lines
Translation: This is a diversified company with a wide global reach and a strong brand – a true “glocal.”
So why is now the time to buy?
Raytheon’s one of the most-watched, most-talked about stocks in the defense sector. And right now, nobody has much good to say about it. Some analysts fear RTN is a “value trap” – meaning that investors who put their money in will effectively have it “trapped” in a stock that goes nowhere. But I think that’s misguided for one simple reason… National security will always remain a priority, and tight economic conditions will do nothing to diminish spending whatsoever.
Rogue nations like North Korea are hungry for nuclear power; China is emerging as a modern military force capable of projecting force in the Asian Region; and, thanks to a fractured Middle East, there are legions of terrorists anxious to make a mark for themselves through whatever means necessary. Such a nasty geopolitical environment will never support a defense systems failure. Therefore, we won’t get one. In fact, if anything, I think we will continue to see defense spending grow in the years ahead.
Lastly, Raytheon is a “defensive” stock in the most traditional sense. It delivers a very respectable 3.50% yield.
Japan's economy has been down in the dumps for so long that it defies the imagination.
Its aging population has already had huge economic consequences ranging from diminished productivity to soaring healthcare costs. Though it's extremely wealthy as a nation - its Kanto region around Tokyo boasts a GDP the size of Brazil's - its growth has been stagnant over the last 20 years, while America's GDP has tripled.
Understandably, many investors and analysts I know have written it off as a "zombie" economy best left to history's financial graveyard.
That's finally about to change. In fact, I'm seeing signs of hope for the first time in nearly 30 years.
Unstoppable Trend: Demographics
Today there are more than seven billion humans on this earth. In addition to being larger than it's ever been, the population is also older.
For the first time in history, the number of people aged 65 and older will outnumber children younger than five worldwide by 2020, according to a report by the National Institute of Health & Aging.
It's already been well-documented how demographics can make or break economies.
As Demographics continue to transform national economies, trillions of dollars in capital will be shifted every year. The aging taking place on a global scale will mean surging profits for investors who know where to look...
When I was recently on the streets of Tokyo, I heard Chinese, Korean, Malay, Indian, Thai, and half a dozen other languages on the street around me. And not from tourists, either.
Contrary to what's happening in the United States and in much of Europe, where immigration has become a four-letter word, newly arrived human capital is a key economic driver here in Japan.
For the first time in a generation, there's income growth, employment growth, and deregulation conducive to entrepreneurship thanks, in large part, to Japanese Prime Minister Shinzo Abe's "Three Arrows" policies.
They're his version of a three-way stimulus program comprised of fiscal expansion, monetary easing, and structural reform. Until recently, the Japanese economy wasn't responding.
Now, that's changing.
Consumer sentiment, in fact, is running at the highest levels since September 2013, as is income growth, which is tracking at the highest levels since August 2007 - over 10 years ago.
Personal consumption won't be far behind.
Which brings me back to immigration.
Japan has the world's worst demographics. The country's population is aging so rapidly, and its birth rate is so low, that it will lose one third of its population by 2060 or sooner.
The only way Japan will have enough workers is to import them.
Officially, the government will tell you that it's the big Japanese manufacturing companies that are hiring highly skilled foreigners with advanced degrees, because that's what fits with their policy narrative.
In reality, many are going to small- and medium-sized companies where they have both the incentive and the freedom to create a life in Japan from scratch.
Both Goldman Sachs and Société Générale have issued client notes this year saying that now is the time to return to Japanese stocks.
Several of my favorites include Sumco Corp. (TYO: 3436), Benesse Holdings Inc. (TYO: 9783), Itochu Techno-Solutions Corp. (TYO: 4739), and Mitsubishi Gas Chemical Co. Inc. (TYO: 4182). You'll notice all of those are traded on the Tokyo Exchange.
Don't let that stop you.
An ETF to Play Japan's Revival
The ETF is straightforward, which I like a lot.
The fund does not have any large-cap companies worth more than $10 billion. Roughly 70.3% of the companies in the fund are growing firms with market capitalizations of less than $2 billion. The other 29.7% of companies have market caps of between $2 billion and $10 billion.
Allocation is split pretty evenly in the sectors likely to grow the fastest ahead of the 2020 Olympic Games and that need foreign workers the most.
That diversity and allocation design has let this fund outpace another popular small-cap investment fund called the MSCI Japan Small-Cap Index over the last decade.
You can buy every one of these companies, plus another 691 of Japan's finest small and medium companies, via the WisdomTree Japan SmallCap Dividend Fund (NYSE Arca: DFJ).
In the last two years, the WisdomTree Japan Smallcap Dividend Fund has shown investors returns of 26%.
The fund is also dividend-weighted, meaning holdings are weighted according to the cash dividends they pay annually.
That's a huge advantage, because it means you're maximizing your cash flow even as you position your portfolio to tap into the best growth and upside potential as the Japanese economy recovers.
I recommend you print out this list and tape it to your computer monitor (or your forehead if you prefer). These are all unstoppable, global, trillion-dollar trends that are reshaping the world. Play on the edges or on the fringes, and you may get lucky. But build your core investments around these concepts, and odds are that you will do very, very well. And bear in mind that this perspective works with or without a financial crisis. It doesn't matter whose butt is in the White House or if Congress gets its act together. And this type of investing will push ahead no matter how a dozen other "coulda-woulda-shoulda" scenarios that have a lot of investors confused right now play out. That's the power of these trends.
My point is that you can master the markets, and you can become very wealthy, by investing in the six trends I've shared with you today that have been at the center of wealth creation since the dawn of time. You just have to know what they are, how much is at stake, and what the keys are for investors.
Making money consistently is absolutely within your grasp.
So stay with me. I'm going to show you how.
I think we're going to have a lot of fun together and, my hope is, make a lot of money too.
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