A classic megatrend example is the Internet. The Internet was introduced only about 17 years ago, yet already 2.1 billion people, about one-third of the world's population are Internet users -- and this number is forecast to swell to 3.0 billion by 2015. Investors who recognized this trend early on and invested in Internet-enabled start-ups such as eBay (Nasdaq: EBAY) and Amazon (Nasdaq: AMZN) have earned huge returns.
America's aging baby-boomer generation is another megatrend, and it's partially responsible for spurring demand for health-care reform.
But there is an even bigger megatrend that is rarely discussed and has global repercussions. I'm referring to explosive growth in the world's population, which is expected to nearly triple to 9 billion by 2050. This growth will result in global food shortages within 20 years, according to some estimates, unless farmers can greatly increase food production. It is estimated that food supplies must grow at least 70% in order to satisfy world hunger. And in case you haven't noticed during a visit to the grocery store, demand is already driving up food prices. This is causing farmers to step-up investments in hybrid seeds, fertilizer, herbicides and other products that can help improve crop yields.
Last week, I discussed two fertilizer companies -- Terra Nitrogen (NYSE: TNH) and CVR Partners (NYSE: UAN) -- that benefit from food-demand megatrends. Seed and herbicide companies should also benefit. The two stocks I profile below are especially attractive, based on their dominant market shares, rising cash flow and above-average yields.
1. Dow Chemical Co.