Tag Archives: NEE

Client Question: How do you invest to deal with the recent disruptive or destructive technology trends?

While Amazon may get the most press for disrupting industries and economies around the world, there are plenty of companies making their own waves on this front. The way to go about investing on the right side of these trends is to think: what companies can Liberty investors own today that will still be around in 10 years to benefit from the growth in their free cash flow and dividends? And what sectors should be avoided?

The sectors we are currently avoiding are energy, telecoms and most utilities that don’t have much exposure to renewable energy.

Their growth could wane quickly – if it is 5, 10 or 15 years from happening, investors should do a discounted cash flow valuation of these stocks. If the valuation reaches that price, they should sell the stock.

Or they could face the “Last Man Standing” scenario, whereby the last purchaser of Nortel or Valeant stock at its peak saw the stock move only lower.

Below is a table of the current investment trends for the future. Unlike the bubble that burst in 2000 that sent technology stocks plummeting, these companies all have real and growing revenues, profits and free cash flows:

WaterA.O. Smith, Lindsay Corp., Danaher Corp.
AgricultureAgrium, Lindsay Corp., Raven Industries
Healthcare – PharmaNovo-Nordisk NV
Healthcare – Medical DevicesBecton Dickinson, Atrion Corp., Coloplast A/S, Globus Medical, Stryker Inc.
Other MedicalBalchem, Mesa Labs, Steris
FintechChubb, Fairfax, Great-West, TD Bank, First Cash Financial, Paychex
RoboticsCognex Corp., Danaher Corp
Life SciencesDanaher Corp., Thermo Fisher Scientific
LogisticsDassault Systemes, Roper Technologies
Artificial IntelligenceDassault Systemes,  Open Text, Shopify Inc., Cognex Corp.
Government RegulationsHalma plc., Intertek Group, Spectris plc.
Renewable EnergyNextEra Energy, Novozymes A/S
InfrastructureToromont Industries, Stantec, Roper Technologies
AerospaceHeico Inc.,RBC Bearings
Automotive ComputerizationLittelfuse Inc.