When you are picking stocks for your retirement portfolio you don't want to have to fuss over them on a daily, weekly or even monthly basis. You should shoot for low maintenance stocks that you can buy hold and largely forget about. You can do this by purchasing industry leaders that support long term trends. These are trends, not fads. Fads can make you money but you have to babysit them. Below I have identified a few trends that I think are lasting. I also threw in a few companies that I personally think will benefit greatly from these trends.
NOTE: The companies mentioned below are meant as an example of how to play the trends I have identified. I am not recommending anyone purchase these stocks at their current prices without additional research and due diligence.
E-Commerce -There isn't much that is out of reach if you have an Internet connection and a credit card these days. People are more comfortable shopping from home or on their mobile devices than they have been in the past and that seems to be a continuing trend. Obviously online retailers like online mega-store, Amazon.com (AMZN) benefit but retail is only one of the benefactors. I think some of the less obvious plays on this trend are potentially more lucrative in the long run.
Visa (V) is one of my top picks for playing this trend. E-commerce requires a credit card and Visa is the most widely used card out there and they get a cut of every transaction. I also think that the younger generation uses far less paper money than previous generations and I do not expect that to change. Not long ago it would seem silly to use a credit (or debit) card to buy a gallon of milk but that is normal these days. One must also consider the emerging markets. Many countries are improving the overall quality of life for their people and that includes infrastructure upgrades that lead to Internet access and access to credit. While I don't believe paper money will be phased out anytime soon, I do think the volume of credit card transactions is climbing steadily higher and will continue to do so for a very long time.
Waste Disposal - This is a service that will always be needed and there is significant room for growth in emerging markets. Countries like China and India have vast populations that are clawing their way out of poverty into a rapidly growing middle class. Suddenly these people have income and access to all sorts of packaged goods that were previous unavailable or out of reach. This is going to increase the volume of trash and keep companies like Waste Management (WM) and Republic Services Inc (RSG) very busy for decades to come.
In particular, I like Waste Management. They are the largest waste disposal company in America and already have a number of joint ventures with Chinese companies that have given them a foothold in the world's fastest growing economy. It also happens that China has a vast and increasing problems with illegal dump sites, water contamination and mismanaged landfills. That foothold represents a lot of potential profit in the not too distant future. Waste Management is also a leader in the technologies that turn waste into fuel and sports an attractive 3.5% dividend yield.
Green Technology - I am not buying into green technology companies right now because they currently rely too heavily on government subsidies and tax incentives to maintain their profitability. Those government subsidies and tax incentives are in danger during these uncertain economic times. However, I do believe that resource conservation is a long term trend and not a fad. Because of that belief I am on the lookout for a green technology company that has a sustainable business model.
Other ways to get in on green technology is by supporting (owning) larger, well established companies with significant green initiatives. For instance, automakers like Ford (F) that are striving to not only make their vehicles more fuel efficient but are making their manufacturing processes more efficient as well. Or a company like Johnson Controls Incorporated (JCI) that specializes in batteries and making buildings more efficient (among other business lines) through the use of smart power control systems.
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