By: Michael Kodari, Founder and CEO of Kodari Securities (KOSEC)
Moving into 2022, while COVID is still front of mind for many investors, there are some more interesting and immediate implications when it comes to investing in innovation as a result of the pandemic.
The healthcare industry has been forced to transform rapidly, and health innovation has gone from strength to strength since the pandemic. Similarly, structural changes such as decarbonisation, ageing of the population and technology advancements like the internet and e-commerce, continue to throw up investment opportunities. This makes innovations in healthcare, technology, aged care and the environment as the four major investment opportunities that are currently out in the market, and appetite for investment is hotter than ever.
Healthcare trends and opportunities
Organisations such asRamsay Health Care,Sonic Healthcare andNanasonics have fared differently under the COVID pandemic, although all are clear beneficiaries from the demographic trend of the ageing population.
Sonic grew its FY21 revenue by 28% on the back of 36 million COVID-19 tests in FY21, while Ramsay recorded a 28% reduction in EBIT for the September 2021 quarter, as isolation orders cut the demand for elective surgery and non-surgical services. Infection prevention company, Nanasonics, owns and develops cleaning and sterilisation technologies that are likely to be in demand in a post-COVID environment, especially within the health sector.
The appetite for investment in aged care
Ageing of the population is another trend that can create fresh business opportunities and diminish others. Ramsay Health Care, Sonic Healthcare and Ingenia are beneficiaries of an older population as the demand for health care and retirement living services increase.
Artificial intelligence and big data
Technological advancements like artificial intelligence (AI) and digitisation are trends that can significantly enhance business process efficiency and productivity, resulting in higher profit outcomes. Super Retail Group and Telstra are able to hyper-personalise service and product offerings while automotive parts retailer Bapcor is able to use digital solutions and data analytics to drive efficiencies in procurement and supplier relationships.
The irreversible and growing trend toward e-commerce and online shopping has fuelled the demand for logistics and associated warehousing to service the fulfilment needs of consumers and merchants. Geoff Goodman, the Goodman Group CEO has stated that his Group cannot build logistics and warehousing infrastructure quick enough to meet the demand for the Group’s specialist buildings and infrastructure.
WiseTech Global, the owner of an integrated global software platform for international logistics service providers is experiencing record demand from the Group’s 18,000 logistics customers.
Structural changes brought about by decarbonisation is a current focal point for clever investors. Boral and BlueScope Steel have each embarked on a decarbonisation strategy built around the recycling of demolition materials and steel. Steel, once produced, exists forever and so is infinitely recyclable.
Western Areas, a nickel-focused base metal explorer, is likely to benefit from the tightening global demand for higher nickel content batteries for the Electrical Vehicle market.
Innovative investment tactics
As major events and trends unfold, it’s the reaction from investors that determines the investment outcome. For example, pandemic conditions may require an investor to make an investment decision that is considered contrary to the ‘conventional wisdom’ prevailing at the time.
Experienced investors know ‘following the crowd’ doesn’t always make money. Smart, well-informed investors who understand the concept of ‘risk-adjusted returns‘, consistently achieve superior investment outcomes, compared to the ‘crowd’.
Looking at 2022, the investment horizon has numerous businesses that have earnings and growth outlooks backed by emerging and sustained trends, likely to support earnings and asset growth well into the future. If investors understand these sectors and invest their money wisely, their 2022 could be a bonza of a year.
Michael Kodari, CEO of KOSEC – Kodari Securities
Michael Kodari is the Founder and CEO of Kodari Securities (KOSEC), a leading provider of investment services to a substantial and diversified client base, including corporations and ultra high net worth individuals. With over a decade of experience in funds management and stockbroking, Michael has worked with some of the world’s leading value investors and financial institutions. A philanthropist and a prominent expert in the stock market, CNBC Asia has referred to him as “the brightest 21st century entrepreneur in wealth management”.
KOSEC – Kodari Securities is a leading provider of investment services to a substantial and diversified client base, including corporations and ultra high net worth individuals. Established in 2010, KOSEC exists to empower and equip investors with the best investment opportunities, knowledge, tools and resources, as well as providing the highest level of product/service offering to help them make better and more informed investment decisions.
Find out more at https://www.kosec.com.au/