These trends will 'define our future,' RBC says. Here's how to play them

Published Sat, Jan 1 20229:00 AM EST

For many, the new year is a time to rethink old and new plans for the future, and RBC has identified five themes investors should understand to prepare for the years ahead. "We have conviction that understanding these themes will enable investors and companies to better take advantage of opportunities as they present themselves," the firm said in a note to investors. "While valuations are theoretically the present value of all future cash flows, the vast majority of discussion tends to focus on the next quarter (optimistically, one to two years), and rarely is the time and effort taken to think 5, 10, or even 15 years into the future," it said. According to RBC, the "five major, global, cross-sector themes we believe will define the future" are: extending lifespans, monetizing data, the blurring lines of physical and digital lives, artificial intelligence and climate change. The bank identified 71 stocks for patient investors that all directly play into one of those themes, take a long-term view beyond traditional 12-month price targets and ratings and include ESG considerations. Here are 10 of them: Consumer names and technology plays take up the most space on the list. Coursera , Procter & Gamble , Tesla and Estee Lauder — as well as PayPal , Shopify and Crowdstrike — are among the names in those sectors. Coursera, the online learning platform, is on the list for its potential to serve an area of the market "irreversibly changed" by the pandemic, which helped make virtual learning and online degrees mainstream, the note said. RBC has a $50 per share price target on the stock, compared with its closing price of $24.44 on Friday. The firm also noted that Tesla has made strides in the auto industry with electrification, connectivity, vehicle architecture and the direct sales model and vertical integration. RBC said the company will likely try to solve "more complex problems," including autonomous driving, and insurance. RBC has a price target on Tesla of $800 per share, compared with its closing price Friday of $1,056.78. RBC said it expects volatility from the stock but that it's looking to 2025 and "believes the multiple will contract as Tesla grows into valuation." PayPal is one of RBC's top picks for companies that are finding new opportunities to monetize data. RBS pointed out that PayPal is one of the only global and at-scale companies that has direct relationships with both merchants and consumers. "This unique market position enables the company to create a cohesive and reinforcing flywheel for its products and services to effectively drive the velocity of money movement inside its ecosystem," RBC said. The firm has a $298 per share price target on PayPal, which closed on Friday at $188.58.

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For many, the new year is a time to rethink old and new plans for the future, and RBC has identified five themes investors should understand to prepare for the years ahead.