Are you looking for some great investments where you can park your money and not worry about it for years? Some of the most exciting opportunities right now are in cannabis and cloud computing stocks. Those industries are getting bigger and the companies that dominate in those areas will be sure to produce some great returns for your portfolio.
Even if you aren’t sure which individual stocks to invest in, that doesn’t mean you can’t get exposure to those industries. There are plenty of exchange-traded funds (ETFs) out there that can give you a great group of stocks to hold without needing to commit to any particular company. Two funds that you will definitely want to consider today are the AdvisorShares Pure US Cannabis ETF (NYSEMKT:MSOS) and the WisdomTree Cloud Computing Fund (NASDAQ:WCLD).
1. AdvisorShares Pure US Cannabis ETF
The growth opportunities in the cannabis sector are undeniable; analysts from MarketsAndMarkets project that the global market will be worth more than $90 billion in just five years and it will grow at a compound annual rate of 28%.
And it wouldn’t be surprising if those estimates were upgraded given the rate at which cannabis legalization has been moving. In 2021, several states have passed legislation, including New York, New Mexico, Connecticut, and New Jersey. A total of 19 states have passed legislation to permit recreational marijuana and more than 30 states already allow marijuana for medical use. There is even hope that marijuana will be legal at the federal level soon, with Senate Majority Leader Chuck Schumer recently introducing draft legislation that could pave the way to legalization. Even though it may be a long shot, if it is able to pass, it could open up the floodgates and instantly make the marijuana industry a scorching-hot one to invest in.
The Pure US Cannabis ETF, which launched in September 2020, is an excellent way to gain exposure to the U.S. pot market specifically. Big names like Green Thumb Industries, Curaleaf Holdings, and Trulieve Cannabis each account for more than 10% of the portfolio’s total weight. And those are the heavyweights, the pot stocks that are industry leaders and that look to be safe bets to do well. Last year, they combined for more than $1.7 billion in revenue — accounting for about 10% of the $17.5 billion U.S. pot market.
They will definitely surge in value once legalization takes place if for no other reason than it will allow them to trade on major exchanges like the New York Stock Exchange or Nasdaq, where they aren’t permitted today because they are plant-touching businesses and thus operating in violation of federal U.S. laws.
2. WisdomTree Cloud Computing Fund
Tech is always a popular place to invest, and there are many different areas you can focus on. One that stands out right now is cloud computing, especially as more businesses do their work in the cloud and workers want to be more remote than ever before. According to ResearchAndMarkets, the cloud computing market will more than double in size by 2025 to $832 billion, growing at a compound annual rate of 17.5%.
The WisdomTree Cloud Computing Fund is another great example of an ETF you can hold while you take advantage of a high-growth sector. Unlike the cannabis ETF, this one is much more diverse simply because there are more companies in the industry — the largest holding is Asana, a work management platform that accounts for just over 3% of the fund’s total weight. Other notable names in the fund are Adobe and DocuSign, two businesses that provide professionals with cloud-based software that they can use anywhere. The top 10 holdings in the fund account for just under one-quarter of its total weight, giving you some excellent diversification.
One of the downsides of that much diversification is that it can lead to underwhelming numbers. But that hasn’t been the case for the Cloud Computing Fund, as its 39% returns over the past 12 months are higher than the S&P 500‘s gains of 35%. If you aren’t sure which tech stock will be the big winner from the rising popularity of cloud computing, investing in this ETF can be a safe way to ensure long-term returns that could continue to outperform the markets.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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