By Rachel Koning Beals
The global population more than doubled in the second half of the 20th century. Over the same stretch, food production grew three times, energy consumption surged four times and overall, economic activity expanded by five times the output of the first half of the 1900s.
By Bank of America’s calculation, it all simply means that human beings have been living beyond their means. And it’s fair to assume that the species, left unchecked, will continue to do so.
The stock research arm of the mega bank /zigman2/quotes/200894270/composite BAC +4.97% believes that “a transforming world needs transformative solutions and not just continue to grow, mine or produce more.”
In a note released Thursday, the team served up a handful of themes and 50 stock ideas to embrace “scarcity.” The combined value? Some $8 trillion in market capitalization.
“Today, less than 1% of the planet’s water is fit for human use and we could run out of freshwater by 2040. Key metals like lithium and nickel could reach structural deficit as soon as 2024 and we could reach peak phosphorus by 2030, which would exacerbate food scarcity,” the research team says. “We are also facing scarcity of human capital and technology” as grandparents greatly outnumber grandchildren in the census results.
They said that technological solutions, a circular economy and revaluing natural capital are some of the solutions at their tipping points that can help solve the problem. The circular economy, for instance, looks to promote sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible, and will need the service sector and large consumer conglomerates to step up.
Investing topics might range from climate-change initiatives to innovative health care, to addressing top-heavy age demographics, and both new and already familiar technology issues, including the chip shortages that contributed to supply chain bottlenecks and empty shelves post-COVID 19.
Read: Here’s the tiny percentage of plastic that’s recycled despite single-use bans, taxes and incentives
Water and food
Think water issues aren’t for the developed world? Think again, BofA warns. Some 15% of the U.S. fresh water supply is lost simply because of leaking pipes. It’s unneccessary waste than only adds to the long-run cost of a disposable economy.
That means fresh water scarcity is a global issue.
Stocks tagged: France’s Veolia /zigman2/quotes/200641726/delayed FR:VIE +1.49% , a water and waste management company that’s over 150 years old; U.S.-based water utility Essential Utilities /zigman2/quotes/203610507/composite WTRG +0.05% ; Hong Kong-listed Beijing Enterprises Water /zigman2/quotes/206466551/delayed HK:371 +1.05% , which specializes in water treatment; Guangdong Investment /zigman2/quotes/210136877/delayed CN:002683 +0.13% , a holding company with interests in water, infrastructure and real estate; and Brazilian water treatment company SABESP /zigman2/quotes/208284849/composite SBS +3.44% .
Some of Bank of America’s concerns aren’t particularly far out on the timeline. The globe could reach peak phosphorus by 2030, a major plant and soil condition factor, which would exacerbate food scarcity, the researchers say. They target two stocks in particular, Russia’s PhosAgro /zigman2/quotes/201306225/delayed UK:PHOR 0.00% and Mosaic /zigman2/quotes/203825795/composite MOS +2.10% , the largest U.S. producer of potash and phosphate fertilizer.
And two additional names focus on animal health, part of advanced farming and a means to keep up protein supplies to a growing global population. They are: Zoetis /zigman2/quotes/207603157/composite ZTS +0.93% and Elanco /zigman2/quotes/203710302/composite ELAN +3.06% .
Technology
Humans will need to power 1 trillion connected devices by 2035, but face a structural shortage in semiconductor chips. It’s a theme already resonating with investors .
To meet demand for processing power, the BofA note calls out: ASML /zigman2/quotes/210293876/composite ASML -0.54% ; KLA Corp. /zigman2/quotes/209248041/composite KLAC -0.28% ; GlobalFoundries /zigman2/quotes/230483311/composite GFS -1.81% ; and TSMC /zigman2/quotes/204359850/composite TSM -2.30% . Related stocks that stand to gain from these developments: Japan-based Shin Etsu Chemical for semiconductor silicon and SUMCO /zigman2/quotes/202910755/composite SUOPY +2.41% and GlobalWafers TW:6488 +0.57% , for silicon wafers.
Don’t miss: ‘Tectonic shift’ to green stocks: BlackRock chart looks beyond oil and gas earnings, momentum
Metals and rare earth minerals
Something to think about: If you live in the West, you use 57 kilograms of newly mined minerals every day. Since 1970, global resource extraction has more than tripled, key metals like lithium and nickel (for stainless steel) could reach structural deficit as soon as 2024, just a few short years from now.
Also something to think about: Lithium-ion batteries are key to the projected electric vehicle growth that features prominantly in the U.S. effort to flip to net-zero emissions by 2050, and halving emissions by 2030.
Opinion: As the stock market struggles, look at these ‘hard-asset’ commodity funds
Add to watchlist
BAC
Add to watchlist
FR:VIE
Add to watchlist
WTRG
Add to watchlist
HK:371
Add to watchlist
CN:002683
Add to watchlist
SBS
Add to watchlist
UK:PHOR
Add to watchlist
MOS
Add to watchlist
ZTS
Add to watchlist
ELAN
Add to watchlist
ASML
Add to watchlist
KLAC
Add to watchlist
GFS
Add to watchlist
TSM
Add to watchlist
SUOPY
Add to watchlist
TW:6488
