3 Stock Picks for Future Growth

Killik's senior investment manager Rachel Winter looks at three stocks from diverse industries, from global e-commerce to European property and dental implants

Rachel Winter 12 April, 2019 | 8:45AM

 

 

Rachel Winter: Amazon (AMZN) is a leading online retailer as well as a leading player in cloud computing. Despite its phenomenal growth to date and the fact that it currently has a market value of just under $900 billion, we still think it has significant further growth potential.

In the US, e-commerce only accounts for 9.9% of total retail sales. We think that number will grow and that Amazon will grow with it, helped by its strong barriers to competition. Amazon can offer products more cheaply than competitors because it has huge economies of scale and its own distribution network.

On the cloud side, Amazon earns about 11% of its revenue from its AWS or Amazon Web Services division, and here it achieved revenue growth of 46% in Q4 2018. We expect high levels of growth to continue as more and more businesses move their operations into the cloud.

Vonovia (VNA) is the largest listed residential property company in Europe, with 350,000 residential units across Germany and Austria. In Europe it’s common to rent indefinitely rather than buy property, and migration into Germany is driving up demand for rental properties.

Although rent is tightly regulated, Vonovia is modernising its property portfolio which is allowing it to reset its rental rates to higher levels. As it is a large company it has its own building and maintenance division which gives it a cost advantage in comparison to other operators. 

The stock pays a decent dividend of just over 3% and in our view it should offer capital growth over the longer term.

One of our investment themes at the moment is medical devices, and an interesting niche within this market is dental implants. Life expectancies are increasing and at the moment our teeth are not likely to last a lifetime. Across the UK and the US the average adult is missing about seven natural teeth. 

Previously, removable dentures were really the only option for those with missing teeth, but in recent years there’s been significant growth in the market for dental implants, which are inserted directly into the jaw bone. They’re costly, but they’re popular because they look natural and they’re permanent. 

A leading producer of dental implants is Swiss company Straumann Holding (STMN). It grew its revenues by 19% last year and we think the future opportunity is significant.

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Amazon.com Inc1,816.86 USD1.36
Straumann Holding AG783.00 CHF-0.20
Vonovia SE43.57 EUR-2.27

About Author

Rachel Winter  is senior investment manager at Killik

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