'Tomorrow's world' gallery: Five stocks transforming our future

The tech disruptors to watch out for

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Thomas Fitzgerald, co-manager of the EdenTree Amity International Fund, discusses five leading-edge sustainable companies effecting positive change for society and the environment, while delivering compelling robust long-term investment cases. 
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Aptiv accelerates electric dreams 

As the automotive industry continues to move towards electrification and autonomy, vehicles are becoming increasingly complex. The associated changes in software, computing power and data processing require new architectures to support them. 

Aptiv is a global technology company that develops these safer, greener and more connected technology solutions for cars.  

The company’s product portfolio matches key technological shifts in the automotive industry, while addressing some pressing socioeconomic challenges. Currently, there are 1.3 million deaths every year linked to road accidents, while globally, the transport sector is responsible for 24% of emissions.

Rising technology demands should drive material structural growth across Aptiv's product portfolio, which is focused on hardware, software, integration, power distribution and data analytics. 

The company's well-established market positioning and ability to integrate the hardware, software and data analytics into one complete system are meaningful competitive advantages.

Aptiv currently trades at a sector multiple of 15x 2020 consensus earnings, despite the company’s leadership position within respective markets, a superior margin and cash flow generation profile relative to peers. 
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Bingo provides access to circular economy 

Waste volumes have grown at a 1% CAGR in Australia over the last decade, driven primarily by population growth, urbanisation and rising domestic GDP per capita. Concurrently, increasing pressures from a regulatory and societal standpoint have placed greater demands on organisations to recycle and report on their overall environmental footprint. 

Bingo Industries is a leading Australian waste management and recycling company providing waste collection, processing, separation and recycling services for enterprise and local governments. 

The firm also offers clients innovative, high-value customer services such as ESG and traceability audit reporting. Above all, it is a participant of the circular economy, recycling more than 80% of the material it collects and diverts from landfill. 

Given its scale, peer-beating holistic service proposition and superior recovery rates, we believe Bingo is well-positioned to benefit from increasing demand. 

Currently, the company’s shares trade close to 10x EV/EBTIDA, a significant discount to peers in Europe and the US, despite the company’s superior return and cashflow generation. 
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Global megatrends drive demand for Borregaard 

Global growth in volumes of lignin, a by-product of wood processing, are expected to outpace global GDP over the next decade, driven by megatrends such population growth, alongside a supportive, environmentally-focused regulatory backdrop.

Borregaard, one of the world’s most advanced biorefineries, develops, produces, and markets specialised biomaterials, biochemicals, and biofuels that replace oil-based products. 

The company, which runs the LignoTech plant in Florida (pictured), has a strong global position, holding a 41% market share and more than 60% according to revenues. Its diverse 600-strong product offering should enable the firm to maintain its position as global leader in wood chemistry solutions.

At current valuation levels, Borregaard trades at a material discount to its peers on most valuation metrics. This is unwarranted, given the company's broad, industry-leading product portfolio and the high barriers to entry derived from its innovative, proprietary production processes.
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Salesforce is democratising complex computing  

The global enterprise software market currently generates approximately $200bn in annual industry revenue, just 13% of total IT expenditure. 

We believe spend will grow at a CAGR of 12% through to 2022 as software gradually replaces legacy infrastructure.

Meanwhile, the confluence of cloud computing with emerging technologies, such as artificial intelligence and the Internet of Things, is democratising complex computing workloads, making them more accessible to companies across all industries. 

A pioneer in cloud computing technology, Salesforce has redefined its core market, CRM software, and established a dominant leadership position in enterprise software. 

The company’s platform provides tools that enable companies to drive innovation, efficiency and flexibility within their business. 

Due to its subscription-based business model, 95% of Salesforc's revenues are recurring, meaning the company has a predictable and defensible revenue stream. 

Salesforce's scale and technological breadth provides ammunition for the company to capture market share and expand reach. Recently, the company has underperformed peers. Shares now trade at a discount to closest peers Adobe and Splunk, despite a far superior growth profile. 

We view the recent contraction in valuation as an attractive entry point.
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Medtronic tackles ageing population challenges 

Two of the most prevalent trends within healthcare are population ageing, where one in three people will be aged 60 or over in developed nations by 2020, and the increasing cost pressures placed on our healthcare facilities. 

Medtronic addresses these societal challenges, with leading market positions globally in devices for cardiac and vascular-related procedures, as well as developing technologies for minimally invasive therapies. 

Medtronic develops therapeutic and diagnostic medical products principally for cardiac and vascular procedures. The company’s strength lies in experience of miniaturising batteries and circuits with applications across different parts of the portfolio. This expansive product offering addresses some of society's most pressing challenges surrounding health and wellbeing. 

In spite of a sustained period of strong share price performance over recent months, we believe the valuation of Medtronic shares offers relative attractiveness given the company's industry-leading product portfolio, best-in-class profitability profile and the firm’s revenue acceleration potential ahead.
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Thomas Fitzgerald, co-manager of the EdenTree Amity International fund, picks his top five sustainable companies creating positive change for society and the environment.

Pioneering cloud technology, specialised biomaterials and advances in electric cars. Leading companies across the globe are harnessing innovation to overcome some of humanity's greatest challenges and transforming the world around us.

Here, we look at five leading-edge sustainable companies effecting positive change for society and the environment, while delivering compelling robust long-term investment cases.

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