Non-fungible tokens (NFT) are one of the new trends this year. NFTs are digital assets that are on the blockchain and can be highly speculative. Some people have paid millions of dollars for an NFT artwork, betting that its value will rise.
But there is a safer way to experience some of the excitement and potential growth that NFTs offer without risking what might turn out to be nothing more than the next fad. Instead, investors are better off buying shares of two companies that have compelling growth prospects, but are still more reliable: Scotts Miracle Gro (NYSE: SMG) as well as Facebook (NASDAQ: FB)… Both businesses are thriving and are likely to rise in value for the foreseeable future.
1. Scotts Miracle Gro
If you are optimistic about trends in the horticulture sector, the cannabis sector, or both, Scotts can be a great source of growth – the company will benefit from expansion in both areas. In fiscal 2020 (which ended in September), the company’s net sales of $ 4.1 billion represent an increase of 31% over the same period last year. The growth was driven by the company’s Hawthorne business, where sales rose 61%. The Hawthorne Garnding Company provides hydroponic materials that allow people to grow crops (including cannabis) without soil. It uses a pump and pipe system (along with other components) to do the job more efficiently than conventional gardening and also takes up less space.
As the cannabis market grows, Scott’s growth potential will grow with him. The company offers materials for all types of clients, from a gardener who grows marijuana for personal use to licensed growers with huge volumes. Scotts predicts its sales in Hawthorne will grow 20% in fiscal 2021, while its US consumer segment (its main horticultural business) will also see positive growth. The company did not specify a specific percentage for the latter in its March report, saying only that it will be better than the segment’s forecast for the fourth quarter.
With New York and New Jersey recently legalizing marijuana, there could be many more cannabis growers looking to use hydroponics for themselves or their businesses. This is why, although Scotts stock has gained 88% over the past year (exceeding S&P 50048%), this is still a great long-term investment.
Facebook released its first quarter fiscal 2021 results on April 28, and the social media company is off to a big start. Sales for the period ended March 31 were $ 26.2 billion, up 48% from the previous year. This was a big improvement over the fourth quarter, when the growth rate was only 33%. For the whole of 2020, sales grew even less – by 22%.
Now that fears about the coronavirus pandemic are starting to subside and companies are resuming normal operations (including ads), Facebook’s ad business is booming. In the second quarter, sales are expected to “remain stable or slightly higher than the growth rate in the first quarter.” In the first quarter, it reached 2.85 billion monthly active users, up 10% over the same period last year. This means that the popular social network continues to attract more people despite its already high user base. Although there are ways to share content across other platforms like Twitter as well as ClickFacebook continues to serve as a hub for many users, allowing them to stay connected with friends and family.
The biggest risk the company faces today is with Instagram and WhatsApp, as the FTC filed a lawsuit last year to force Facebook to sell those assets. It says that “Facebook has maintained its monopoly position by buying up companies that pose competitive threats and introducing restrictive policies that unnecessarily hinder actual or potential competitors.”
However, given its huge resources (over $ 19.5 billion in cash and cash equivalents as of Q1), even in the worst-case scenario where the business splits up, Facebook will still be fine. The company has copied some of Snap’s most popular features in the past, including its “stories” that users share with each other, and it could probably do the same with Instagram if the need arose. Facebook also already has a messaging service that could emerge as a competitor to WhatsApp. The key takeaway here is that with a lot of money and a strong user base, investors don’t need to worry about Facebook’s business despite the uncertain path ahead. It is a growth machine that will continue to look for ways to evolve and meet the needs of its users.
This article represents the opinion of an author who may disagree with the “official” position of the Motley Fool premium advisory service. We are colorful! Bidding on an investment thesis – even our own – helps us all to be critical about investing and make decisions that help us become smarter, happier, and richer.