Innovation is a key factor when it comes to the success of a company. It’s all too easy to keep doing the same old thing once a product or service becomes a hit. However, that approach eventually leads to stagnation. It’s the innovative companies that stay relevant. And it’s the innovative stocks that offer long-term growth.
These seven companies below have proven that they are willing to push the envelope. They may have successful products now, they may have had big hits in the past, but you can count on them to always having something new and groundbreaking in the pipeline.
- Apple (NASDAQ:AAPL)
- Microsoft (NASDAQ:MSFT)
- Disney (NYSE:DIS)
- Amazon (NASDAQ:AMZN)
- Tesla (NASDAQ:TSLA)
- Shopify (NYSE:SHOP)
- Beyond Meat inc (NASDAQ:BYND)
Investors will find these innovative stocks often also happen to be the least impacted by events like the novel coronavirus pandemic. They are affected like any other company, but by their nature, they recover and adapt.
Innovative Stocks: Apple (AAPL)
Apple’s embrace of innovation has seen the company reinvent itself multiple times over the past 4.5 decades. It began as a computer company, then embraced consumer electronics with the iPod. Apple then upended the music industry, turning its iTunes music store into the place to buy music.
In 2007, with the announcement of the Apple TV video streamer and iPhone — two releases that would help to kick off new product categories that soon exploded in popularity — the company dropped “Computer” from its name to become just Apple.
The iPhone in particular drove AAPL stock at a dizzying pace. It would have been easy to sit back and rely on the iPhone, but Apple is one of the most innovative stocks for good reason. The company continued to push for the next big thing, with all-new products including the iPad, Apple Watch and AirPods. It expanded into subscription services including Apple Music, Apple TV+ and Apple Arcade.
And we know from rumors that Apple continues to push the envelope, with projects in the pipeline ranging from augmented reality glasses to autonomous car technology.
A decade ago, MSFT wouldn’t likely have been considered for a list of innovative stocks. It was best known for Windows and Office — products it had been flogging for decades. There were other ventures like the Xbox game console, the Bing search engine and a disastrous attempt to buy its way into the smartphone game with the 2013 acquisition of Nokia’s (NYSE:NOK) Lumia smartphones. But the company seemed stuck in a rut.
However, in recent years MSFT stock has been increasingly powered by a rediscovered innovative streak.
That’s accelerated under Satya Nadella, who became CEO of the company in 2014. We’ve seen Microsoft turn Office into a subscription service that embraces mobile platforms. The company has become a leader in online gaming services with Xbox Live, Xbox Game Pass and even made Xbox game consoles available as part of a subscription. Its Surface line of PC hardware has expanded into laptops and a desktop, with the innovative Surface Pro tablet spawning an Apple copycat in the iPad Pro. MSFT’s Azure has become one of the top cloud computing solutions.
That focus on innovation has helped to power MSFT stock to big gains in recent years. After being flat for the first 14 years of this century, since Satya Nadella arrived on the scene in 2014, MSFT shares are up by more than 450%.
Innovative Stocks: Disney (DIS)
Walt Disney is another company that repeatedly pushes the envelope in order to stay on top. The company has key lines of business that have been in place for many years, like its theme parks. But even there, Disney never sits still. Disneyland’s new Star Wars-themed Galaxy’s Edge attraction is a technological marvel that reportedly cost over $1 billion.
The company expanded into cruise lines in 1996. That’s one of the drags on DIS stock during the coronavirus pandemic, but until its ships were sidelined, they proved to be a highly profitable sideline. The same year it bought a television network in ABC, also gaining sports network ESPN. In 2006, the company bought Pixar Animation. In 2012, Disney had the foresight to snap up the rights to Star Wars from George Lucas for $4 billion.
Disney has been hit hard by the pandemic, which closed its theme parks and grounded its cruise ships. However, another new line of business has helped to save the day. Last November, the company launched its Disney+ video streaming service. Subscriptions exploded far beyond expectations, hitting 50 million in April. One industry analyst has crunched the numbers and thinks Disney+ could be a $30 billion business by 2025, rivaling its theme parks.
DIS stock is down in 2020, but the success of Disney+ has helped cushion it from the worst of the pandemic’s blows — and it’s developing into a hit that will help to power Disney shares going forward.
Amazon may well be the poster child for innovative stocks.
In 26 years, the company has gone from a modest website selling books, to an e-commerce behemoth that has rewritten the retail landscape. Along the way, Amazon has pioneered eReaders, cashier-less shopping, smart speakers and other technology. It’s spawned its own delivery service. Amazon Prime Video is one of the world’s most popular streaming video services. Amazon Web Services (AWS) is the world’s cloud computing leader. AWS is now Amazon’s most profitable division by far, and powers big names like Netflix (NASDAQ:NFLX).
There have been flops like the Fire Phone and the Echo Look, but one of the traits of companies that push the envelope is that they aren’t afraid to fail.
The constant, relentless innovation has paid off for those who invested in AMZN stock, as well as making founder and CEO Jeff Bezos the world’s richest man.
Innovative Stocks: Tesla (TSLA)
TSLA stock is a no-brainer for any innovative stocks list. The world’s most valuable car maker has been a driving force in bringing electric cars into the mainstream. Tesla is at the cutting edge of autonomous driving technology.
It’s not just its electric cars that make Tesla such an innovator. The company has greatly boosted adoption of the technology by building out a network of Superchargers. This allows Tesla owners to drive cross-country, solving one of the biggest problems in electric car adoption.
Its Powerwall battery solutions are powering homes during blackouts. The Tesla Solar Roof — with tiles that look like standard roofing materials — has the potential to revolutionize homeowner solar power adoption. The company has also put its battery and solar know-how together to build a Virtual Power Plant in Australia, with solar panels feeding into thousands of Powerwalls.
Canada’s Shopify saw an opportunity to cater to small retailers who wanted their own e-commerce solution. Instead of being lumped in on Amazon Marketplace, Shopify solutions let them easily create their own, personalized website. Last year, the company invested $1 billion in building out its own fulfillment centers, then acquired robotics startup 6 River Systems to automate them. In 2019, Shopify merchants reported that from Black Friday to Cyber Monday, they sold $2.9 billion in merchandise.
From e-commerce, Shopify has continued to expand its offerings. The company now offers point-of-sale hardware for brick-and-mortar retailers. Shopify Capital offers small business loans. The company even offers a subscription help-desk solution.
SHOP stock has benefited tremendously from the pandemic, as small retailers scrambled to offer online shopping. Shares in Canada’s most valuable company are up 150% in 2020 alone.
Innovative Stocks: Beyond Meat (BYND)
Shares in Beyond Meat have had a turbulent ride since the company’s 2019 initial public offering. They closed just under $235 last July, skyrocketing past the $25 IPO price, before going on a roller coaster.
With a company that’s pushing the envelope and building demand just in time for a pandemic to hit, things are going to be rocky. Beyond’s plant-based meat substitutes had been selling out in national restaurant rollouts, but the pandemic hurt those sales. At the same time, its grocery store sales nearly tripled in the last quarter, helping to offset that pain.
Plant-based meat seemed like a fad a few years ago, especially when the results made no attempt to fool anyone. Vegetarians bought the products, but there was little chance they would go mainstream. Beyond Meat’s innovation has delivered plant-based ground beef, sausage and chicken nugget substitutes that can fool consumers. They look and taste like the real thing. That’s been the key to mass adoption.
If Beyond can continue to deliver, continue to expand its product range, lower costs to make the products more consumer-friendly and hold off competition from the likes of Impossible Foods, the future looks good for BYND stock.
Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015. As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.