Structural change is a constant theme. The key thing for investors is being able to identify which trends will prosper and which will fall by the wayside.
Telcos and the internet
In Europe for a four-week break, Charlie Aitken witnessed an even greater level of mobile data addiction than he’d seen before. MDA is not going away anytime soon and Charlie is big on Telstra locally and Google and Apple internationally.
If you want to know how to buy international stocks, check out this Short ‘n’ Sweet [1] from earlier this year. The rates may have changed but the method is still relatively straightforward.
Telcos are also a theme of Gen Y. On Monday, James Dunn examined some of the sectors and companies that the spending habits of this generation are driving. Their approach to life is very different to previous generations but you need to understand their habits if you want to know which sectors are going to grow in the years to come.
As well as Telstra, James singles out TPG as a Gen Y stock. Big players in the online and data space should benefit from Gen Y but don’t be complacent. The other thing about this generation is that they can be fickle. Think Myspace, which was quickly overtaken by Facebook, which has just reported above expectation sales of $US2.91 billion for the second quarter in the US.
“Companies struggle to retain Gen Y customers, because of the line between what’s hot and what’s not – if a product or service falls out of favour, it is tough to get it back. This makes it difficult to tap into that Gen Y buying power and invest to capture it,” James says [2].
And just because something is hot, doesn’t always make it a good investment proposition. Twitter will announce its earnings next week but it has suffered from negative reports about declining user numbers, although it has still managed to increase revenue.
Financial services
Financial services is another key trend. Putting the banks’ traditional activities aside for a moment, what they, and other major financial services companies, stand to benefit from, is the increasing pool of superannuation savings. This is now at over $1.8 trillion dollars and will only grow as the superannuation guarantee increases from 9.5% to 12% over the next few years.
In our limited edition eBook on key trends for 2014/2015, Peter Switzer and Paul Rickard comment on the rise in the number of SMSFs and their funds under management.
“SMSFs may account for the lion’s share of superannuation assets but trustees have been notoriously hard to nail down. Fund managers vie for their attention but SMSF trustees are reluctant to be told what to do, after all, for many their distaste of relying on others is actually what led them to start up an SMSF in the first place,” they write.
But there are companies that have been relatively successful at securing a piece of the SMSF market, such as AMP through its acquisition of administration platforms Cavendish and part ownership of SuperIQ, which also owns Super Concepts.
“Locally-listed international fund managers Magellan Financial Group (MFF) and Platinum Investment Management (PLA) have performed particularly well over the past 12 months to two years, but investors might be better off finding exposure to the nuts and bolts companies involved in superannuation,” they say.
Computer registry business Computershare (CPU), is another company that should benefit from increased trading activity.
If you’d like a full copy of 5 Big Investment Ideas for the New Financial Year click here. [3]
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Follow the Switzer Super Report [4] on Twitter
Also in the Switzer Super Report:
Follow the Switzer Super Report [4] on Twitter
Also in the Switzer Super Report:
- Charlie Aitken: European Vacation Themes [5]
- Tim Olsen: Archibald provides platform for investing [6]
- Roger Montgomery: Tassal – something smells fishy [7]
- Staff Reporter: Buy, Sell, Hold – what the brokers say [8]
- Tony Negline: use an actuary [9]
- Questions of the week: Market timing and PE as a guide [10]