I have a substantial portion of my portfolio invested for growth, and I spend a lot of time researching big trends and looking for companies set to profit from those trends for the long term. Two major demographic shifts that will affect the world for years to come are already having major repercussions. Moreover, they represent incredible investing opportunities. Those trends? The aging of populations in developed countries like the U.S. and the rapid expansion of young middle-class populations in developing economies.
Image source: Getty Images.
I've recently invested in Teladoc Health (NYSE: TDOC) and Jumia Technologies (NYSE: JMIA) to profit from these trends. While both companies have a lot to prove and will face stiff competition, they're also incredibly well positioned as early movers, and are growing at rapid rates.
Keep reading to learn why I added both to my own portfolio, and why you should consider doing the same.
Caring for more people in a better, cheaper way
The aging of the baby boomer generation is set to have major repercussions on U.S. demographics. Over the next decade, an average of 10,000 boomers will turn 65 every day, and when the last one turns 65 in 2029, America's 65-plus population will have doubled from 40 million in 2010 to 80 million.
Seniors require substantially more medical care than younger people, and the U.S. healthcare system is already burdened with high costs and a significant inequity of care across demographics.
Moreover, the global middle class is burgeoning. It is expected to grow by nearly 2 billion members over the next couple of decades, and it's going to take a combination of more trained medical practitioners and better technology tools to meet the healthcare needs of so many people.
Image source: Teladoc.
Teladoc sits squarely in a position to benefit from both trends. In the U.S. and other developed countries experiencing the same aging trend, Teladoc is already helping insurers and healthcare providers deliver cheaper, faster care with better outcomes. The company's revenue shot up 43% last quarter, with U.S. subscription revenue increasing 33% and organic revenue up 23%.
There are risks, of course. Teladoc is still losing money, reporting a $30 million net loss last quarter. However, it has almost $500 million in cash on hand, and management expects it to be cash-flow positive in 2019, a huge step in proving the sustainability of its business. And although there's the risk of bigger, better-capitalized companies outcompeting it, the global opportunity is so massive, I expect there will be multiple winners in this space, including Teladoc.
As a pure-play investment on virtual care, Teladoc Health gives investors a great opportunity to profit from two of the biggest trends that will affect the world for decades to come.
Don't sleep on Africa
When it comes to international growth, China and, to a lesser degree, India get most of the attention. And while both of those countries are set to drive a significant portion of global growth in the decades ahead, Africa often gets overlooked.
And not for no reason. Frankly, investors outside of the continent haven't been presented with many opportunities to invest in companies focused on it so far. Jumia Technologies, with its recent IPO and listing as an ADR on the New York Stock Exchange, looks to be changing that.
Jumia (pronounced joo-me-ah) has been variously described as either the Amazon.com or MercadoLibre of Africa, and there are certainly parallels to both companies. Jumia is Africa's leading e-commerce platform, operating in 14 of its biggest countries, which generate a combined 72% of the continent's GDP and have almost 80% of Africa's internet users. In short, Jumia's powerful platform does three things: provides a country-relevant marketplace for buyers and sellers to connect; provides logistics to make sure buyers receive the goods they buy; and provides a service -- JumiaPay -- to facilitate online payments.
Image source: Jumia Technologies.
Jumia, as a first mover, is establishing itself as a reliable partner for merchants and a dependable place for consumers to shop. Considering there are more than 700 million people in the 14 countries it does business in today, and that the median age in those countries is under 20 (that's not a mistake), being the first mover there could pay off in a very big way.
Like Teladoc, Jumia is also losing money now, but unlike Teladoc, management doesn't anticipate it will become profitable in the foreseeable future. The company must establish a toehold in current and future markets in Africa, and it will take a lot of money to do so. This will be the primary use of the $280 million in proceeds from its recent public offering.
Yes, it's a long shot that Jumia will be the next Amazon or MercadoLibre. But like both, it's a big step ahead of the competition, and like MercadoLibre in Latin America, there isn't really another runner in the race yet. If management can establish a big enough head start and -- most importantly -- become the go-to online store for young African shoppers, investors should do incredibly well over the long term.
Balancing risk and reward
Because both Teladoc and Jumia continue to burn cash and face considerable potential competitive threat, neither represents a very big portion of my portfolio; combined, they make up about 2% of all my stock investments. And as things stand today, that would significantly limit the financial harm I would feel if either -- or, heaven forbid, both -- were to fail.
Yet even though both make up a small portion of my current investments, I stand to see meaningful wealth generated if either lives up to even a small portion of its potential. Moreover, I'm prepared to buy more of them over time, based on the business results.
If you're still many years from retirement, taking a small stake in two high-growth companies like Teladoc and Jumia could pay off tremendously down the road. And by starting with a small stake today, you'll also reduce the potential losses if things go wrong.
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John Mackey, CEO of Whole Foods Market, an AMZN subsidiary, is a member of The Motley Fool's board of directors. Jason Hall owns shares of AMZN, Jumia Technologies AG-ADR, MELI, and Teladoc Health. The Motley Fool owns shares of and recommends AMZN, MELI, and Teladoc Health. The Motley Fool has a disclosure policy.