Three stocks for sustained growth

Paul Niven, manager of the Fandamp;C Investment Trust, chose three stocks that should see long-term growth from structural changes in demand

The goal of the F&C Investment Trust is to provide shareholders with long-term capital and income growth. With assets exceeding 7 billion, it is the oldest and largest investment firm in the United Kingdom and a member of the FTSE 100. It has produced increasing dividends for 55 years running and invests in both private equity and listed stocks. The trust is managed cautiously and is globally diversified.

Working with specialized stock-pickers from Columbia Threadneedle Investments and other companies in the market, I have been in charge of the company since the middle of 2014. This exposes the trust to various regions, investment philosophies, and industries, including businesses that stand to gain from long-term shifts in our spending patterns, payment methods, and technological usage. These themes are exemplified by the following holdings.

Diversified stocks for sustained expansion.

The long-term shift away from cash and toward card and digital payments is led by Mastercard (NYSE: MA). It allows for an asset-light business model and outstanding capital returns by earning fees on transaction volumes and values without assuming credit risk. It has a major competitive advantage due to its size. It is challenging for new competitors to imitate Mastercard's network because consumers want widely accepted cards and retailers want to accept the cards their customers already use. There are prospects for expansion in emerging markets in addition to the continuous move away from cash transactions in developed markets. Additionally, Mastercard is growing its value-added services, such as open-banking, data analytics, and cybersecurity, which presents more growth prospects.

Three major long-term trendselectrification, energy efficiency, and AI infrastructureare supported by the technology provided by Infineon Technologies (Frankfurt: IFX). It has a solid competitive position that has been developed over many years. Many of the current changes, such as the switch to electric vehicles, renewable energy, and grid modernization, depend on sophisticated power management, and Infineon is the world leader in power semiconductors, which are critical in this field.

Watch the entire video here: Another major source of demand is being created by the rapid development of AI. Effective power management is becoming more and more crucial because the data centers required to train and operate increasingly complex AI models need enormous amounts of electricity and processing power. For Infineon, this is a major new growth market that was hardly present a few years ago. We think the current valuation does not accurately reflect the potential, despite the volatility of its shares.

Since the pandemic, Live Nation Entertainment (NYSE: LYV), the largest live entertainment company in the world, has seen average annual revenue growth of 15%. Demand for live experiences, like concerts, is rising as a result of a structural shift in consumer spending toward experiences rather than goods, which is helping the company. The company has a dominant position in the live entertainment sector thanks to the combination of ticketing through Ticketmaster, concert promotion through Live Nation, and venue ownership and management. On the same platform, customers can purchase tickets, see their favorite performer, and visit a venue. As the demand for live entertainment increases, Live Nation can profit at multiple stages thanks to this vertically integrated model, which generates a strong competitive advantage.

Each of the three companies mentioned above has established a strong competitive position in a sector that benefits from a long-term change in demand, despite operating in very different industries. Finding businesses that can convert these structural shifts into long-term, sustainable growth can present investors with opportunities that go well beyond the short-term market cycle.