It goes without saying that most investors allocate capital into the stock market as they are looking for growth in their portfolios. Growth is the perennial buzzword for investors as they seek out companies that can build a better tomorrow, but the reality is that not all companies are able to sustain growth over long periods of time without faltering.
While it’s normal for companies to go through the ebb and flow of economic cycles, some companies manage to grow much better than others. This is because such companies possess a strong competitive moat and are able to maintain a lead over their close competitors. For investors who practice a long-term buy-and-hold strategy, it’s important to select companies with long-term growth prospects, as this means there is less chance of their investment thesis being invalidated.
Here are three companies I believe possess massive growth potential over the next few years.
1. Singapore Exchange Limited
Singapore Exchange Limited (SGX: S68), or SGX, is Singapore’s sole stock exchange. The bourse provides a platform for the trading of securities such as options, derivatives, futures, fixed income, and equities. The group also provides listing, clearance, and settlement services for listed companies.
The group just released its Q1 2020 earnings (for the period ended 30 September 2019), and revenue was up 19% year on year, while net profit jumped 25% year on year to hit its highest quarterly profit in 10 years. This set of stellar results shows the growth momentum for SGX, as it continues to release new and innovative products to cater to investors who need to hedge their portfolios from volatility. With the group evolving to become a multiasset exchange, I believe there is still a long runway for SGX to continue growing.
2. Riverstone Holdings Limited
Riverstone Holdings Limited (SGX: AP4) is a global manufacturer of nitrile and natural rubber cleanroom gloves for the semiconductor industry as well as premium nitrile gloves for the healthcare industry. As of 31 December 2018, the group had six manufacturing plants in Malaysia, Thailand, and China with an annual production capacity of 9 billion gloves.
Nitrile and rubber gloves are in a secular growth trend, and demand for them will only continue to rise over time. For healthcare, many emerging countries are investing in healthcare facilities, while the rising middle-class populations of these nations can now afford better medical care. These trends fuel rising demand for healthcare gloves used by doctors and nurses in clinics and hospitals.
For the electronics industry, progress with artificial intelligence and the Internet of Things has propelled the demand for cleanroom gloves. These two trends represent multiyear growth opportunities for Riverstone.
3. Boustead Projects Limited
Boustead Projects Limited (SGX: AVM), or BPL, is an industrial real estate solutions provider. The group has engineering expertise in the design-and-build and development of smart business parks and industrial developments for clients.
BPL has strengthened its core capabilities and competencies over the years by investing in research and development, as well as partnering with industry-leading firms in harnessing technology to aid in the design and construction process. Armed with these technologies and capabilities, the group has been clinching major contracts, two of which were above S$200 million, a first for the group. With Singapore remaining a popular destination for multinational firms to set up shop, this trend will ensure BPL can continue to garner contracts to keep its order book full.
- Motley Fool Issues New SGX Buy Alert
- 1 Solid Singapore Blue Chip That Has Paid Dividends for More Than 15 Years
- DBS, OCBC and UOB: Are Banks’ Dividends Sustainable? – Part 1
- 2 Solid Singapore REITs to Consider Amid Uncertainty
- 30 Best Singapore Shares for September 2019 and Beyond
- 3 Reasons Why I’m Considering Buying REITs Right Now
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange Limited, Riverstone Holdings Limited, and Boustead Projects Limited. Motley Fool Singapore contributor Royston Yang owns shares in Singapore Exchange Limited and Boustead Projects Limited.
Motley Fool Singapore 2019