Unveiling the innovative products and expanding industries propelling America's enduring market leaders
In the dynamic world of finance, understanding the key themes driving the market can provide valuable insights for investors. Here are three major themes currently shaping the investment landscape, as outlined in the RBC Global Asset Management report.
- Modestly Lower Interest Rate Environment
With potential rate cuts in the U.S. and Canada predicted for late 2025, the lower interest rate environment could benefit non-yielding assets such as gold and Bitcoin. This environment is expected to spur positive momentum in rate-sensitive sectors like biotech, driven by the increasing demand for senior-related drugs and treatments due to ageing populations.
- Physical Economy Growth: Infrastructure & Housing
The reshoring of policies and housing supply shortage in the U.S. are leading to increased investment in infrastructure, manufacturing, and home construction. This presents strong opportunities in sectors tied to homebuilding and infrastructure.
- AI Expansion: Building the Digital Future
With an estimated $700 billion yearly spend on AI infrastructure by 2030, the AI industry is in a "build phase." The focus is on those involved in AI infrastructure and computing, building the digital future.
While the RBC source does not provide specific company names associated with these themes, other sources mention broad sectors like technology, healthcare, and real estate as thematic focuses.
In the stock market, Dollar General (NYSE: DG) is making waves. With its competitor, Family Dollar, closing stores and transferring market share, Dollar General is believed to be in the early stages of a significant turnaround. In its last earnings call, the company reported accelerating revenue and margins, causing the stock to jump 16%. Despite concerns over tariffs and household spending, these factors have been priced into Dollar General's stock, potentially making it ripe for a rerating.
Another company worth mentioning is Axon Enterprises (Nasdaq: AXON), formerly known as Taser. Axon focuses on reducing deaths by firearms and has a bodycam product with AI software for police reports. The company's penetration of global markets is still in the single digits, but it is projected to continue 27% top-line growth. Axon's bodycam product saves an average of four hours of police time a day.
The investment process prioritizes companies with growing revenue, margins, and earnings. The portfolio construction approach is a split between core stock selection for long-term thematic winners and tactical selection based on growth and inflation outlook. The investment style is active, favoring stocks with strong share price momentum. The analysis combines fundamental work with macroeconomic analysis.
While the specific companies linked to these themes are not detailed in the provided sources, investors can use tools like the Interactive Brokers tool to discover companies linked to themes such as “Generative AI” or “Nuclear Energy.”
[1] RBC Global Asset Management Report [2] Other Source 1 [3] Other Source 2 [4] Other Source 3
- Recognizing the impact of tariffs on household spending, investors might consider companies with resilient operations in the retail sector, such as Dollar General, which reported accelerating revenue and margins, indicating a potential turnaround and growth potential despite tariff concerns.
- As the focus on artificial intelligence (AI) continues to expand, investors may find opportunities in companies that specialize in AI infrastructure and computing, like Axon Enterprises, which is growing in global markets with its bodycam product featuring AI software for police reports.
- In light of the predicted lower interest rate environment and the potential for increased investment in infrastructure, investors may want to explore opportunities in sectors tied to homebuilding and infrastructure, such as those involved in manufacturing and housing construction. Additionally, rate-sensitive sectors like biotech could benefit due to the increasing demand for senior-related drugs and treatments in response to ageing populations.
