3 Amazing American Megatrends (And 3 Great Actions to Make Money From Them)

Sometimes it’s easy to forget that innovation isn’t just about making money for shareholders; it’s also about making the world a better place and being rewarded for it in the process. For example, the incredible increase in corn production in recent decades helps secure the food supply, increased fuel economy helps preserve the environment, and increased oil and gas production in the U.S. helps use natural resources and ensure energy security.

Deere (OF -0.94%), adze (TSLA -2.33%)and Baker Hughes (BKR -0.88%) there are three companies that contribute to these success stories, and this is what makes them attractive to long-term investors.

1. Deere and agricultural productivity

According to the United States Department of Agriculture (USDA) and the Food and Agriculture Organization of the United Nations (FAO), US corn yields improved by 34% between 2002-2022. This number is in stark contrast to the drop in corn yields in the European Union. This is a remarkable feat considering that the US produces nearly a third of global corn, with only China (24%) and Brazil (10%) coming close to it in terms of production.

Data source: USDA, FAO. Table by author.

While the causes of increased productivity are up for debate, Deere precision agriculture equipment and solutions will undoubtedly contribute to it. While the company’s near-term conditions at the end of the market remain challenging due to lower prices for key crops (corn, wheat and soybeans), the long-term outlook remains positive.

Moreover, other major corn-producing countries are looking to catch up with US yield levels. In that case, they will likely need to invest in internet-enabled precision farming solutions that can control spraying and fertilization and help plan planting and harvesting. Deere’s precision agriculture solutions are embedded in its hardware, giving it a long-term growth opportunity for equipment and software solutions.

2. Tesla and fuel economy

Elon Musk doesn’t always get the credit he deserves. However, it almost single-handedly changed the reputation of American cars from being gas guzzlers to becoming leaders in efficiency and quality.

Tesla continues to hold 50.8% of the US electric vehicle (EV) market by volume, with its closest competitor, Ford Motor Companya distant second at 7.4%. Tesla dominates the US electric vehicle market, with its Model Y alone accounting for a third of total electric vehicle sales. The company got there by producing high-quality, fuel-efficient electric vehicles.

According to the US Department of Energy, here is a short list of the most efficient midsize vehicles on the US market. While Hyundai and Toyota Mid-size models are comparable in terms of efficiency, with Hyundai as a car company holding just under 5% of the US electric vehicle market and Toyota holding less than 2%.

Data source: US Department of Energy. Table by author.

Tesla undoubtedly has the early-mover advantage in electric vehicles, and Musk plans to keep it that way, generating the volume growth needed to lower the unit cost of production and make electric vehicles affordable.

While much of the excitement surrounding Tesla is based on the potential for robotaxis and self-driving cars, the foundations of its growth are laid on its current EV models.

Image source: Getty Images.

3. Baker Hughes and US oil production

U.S. oil production growth in 2016 was slightly less remarkable, and the U.S. now leads the world in oil production by some margin.

US oil production data by YCharts

It comes down to increased productivity in the Permian region, which stretches across Texas and New Mexico, driven by fracking, improved drilling techniques and better resource utilization. An oil and gas services company like Baker Hughes is a big part of that. In addition, the outlook for Baker Hughes’ liquefied natural gas (LNG) solutions will also receive a boost if more export capacity is approved.

A mid-term boost to the company’s oil and gas field technology services will complement its growing growth in LNG solutions and new energy technologies, while helping the US meet its energy security needs.