Theme 1. Cannabis

Cannabis stocks have experienced ups and downs in recent years, but sector director Kris Inton expects that considerable change in cannabis consumption in the coming decade will drive growth, from the legal U.S. market’s estimated $10 billion today to upward of $80 billion by 2030.

That growth will come from the likely legalization of tetrahydrocannabinol (or THC) by additional states seeking new tax dollars to plug pandemic-related budget gaps.

Stock picks: Aphria (APHA), Canopy Growth (CGC), Green Thumb Industries (GTBIF)

(Photo: Shutterstock)

Theme 2. 5G

“We view 5G as more evolutionary than revolutionary for wireless carriers,” says sector director Mike Hodel. Firms that can leverage the technology to drive innovation will benefit most, including application developers and media firms. But it’s hard to identify these in advance, Hodel notes, because many will likely be startups.

However, companies that facilitate 5G-related services also stand to benefit, including semiconductor firms and equipment vendors. For investors seeking a pick among mainstream carriers, Hodel gives a tentative nod to Verizon.

Stock picks: Nokia (NOK), Dish Network (DISH), Qualcomm (QCOM)

(Photo: Shutterstock)

Theme 3: Electric Vehicles

Senior analyst Seth Goldstein forecasts that one in five vehicles sold globally in 2030 will be powered by electricity. Electric vehicle adoption will increase once EVs reach cost and functional parity with internal combustion engine vehicles, expected in 2025.

Investment opportunities exist throughout the supply chain, including lithium producers, auto suppliers and automakers.

Stock picks: BMW (BMWYY), Sociedad Quimica Y Minera De Chile SA (SQM), General Motors (GM)

(Photo: Shutterstock)

Theme 4: Renewable Energy

Renewable energy has the chance to eventually take the place of fossil fuels, says strategist Travis Miller. But this won’t happen in the next decade; rather, he projects renewables will make up 22% of electricity generation by 2030, up from 7% to 8% today. He thinks wind growth estimates are overstated and that solar will be the key disruptor.

Stock picks: First Solar (FSLR), NextEra Energy (NEE), Edison International (EIX)

(Photo: Shutterstock)

Theme 5: Big Pharma/Biotech

These companies’ R&D focus has shifted away from primary care toward niche diseases where they can maintain strong pricing, according to strategist Karen Andersen. And drug development time is shrinking, thanks to faster FDA approvals.

Nevertheless, drug makers face pricing and policy headwinds. No matter who wins the November election, Andersen expects some policy change, though this will result in no more than a 2% hit to industry sales. She also expects fewer cases of new drugs being priced well above cost-effectiveness guidelines.

Stock picks: Roche (RHHBY), Merck (MRK), Biogen (BIIB)

(Photo: Shutterstock)

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(Related: 9 Stocks to Avoid in a Struggling Economy: Morningstar)

In a tumultuous year for stock investing, the persistence of the coronavirus pandemic, economic uncertainty and the upcoming U.S. elections will likely keep stock investors on their toes for the foreseeable future, Susan Dziubinski, director of content for Morningstar.com, noted in a recent blog post.

Morningstar’s prescription for successful stock-picking during times of turmoil is to focus on the fundamentals and invest for the long term, according to Dziubinski.

During the 2020 Morningstar Investment Conference, a team of Morningstar’s senior equity analysts applied this fundamentals-based approach to five investment themes the firm expects to dominate during the next decade.

See the gallery for three of their best ideas in each of those themes, according to Dziubinski.

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