Millennials are Overtaking Baby Boomers as the World’s Largest Generation. So It’s Time to Start Investing in the Products They Buy.
Last month, I began my series on the Key Demographic Trends that I believe will provide the next great investing profits, with opportunities from the graying of America. Here, I want to cover the second trend: the incredible profits we can reap by focusing on the Millennial generation and their spending habits. Later, I’ll give you a few millennial stocks worth buying.
The Millennials are Overtaking the Baby Boomers!
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While we Baby Boomers (born between 1946-1964) growing older will offer many investment possibilities, another segment of the population is poised to overtake the Boomers this year, offering increasing investment potential. That group is the Millennials (born between 1981-1996). The U.S. Census Bureau predicts that the Millennial population will surpass the Boomers in 2019, growing to 75 million, while the Boomers decline to some 72 million. Millennials comprise 25% of the U.S. population, and 27% of the global population.
Asia accounts for the largest segment of Millennials, about 58% of total Millennial population, and in absolute terms, India, China, the U.S., Indonesia and Brazil have the world’s largest Millennial populations.
And Millennials are pretty well-heeled. It is estimated that $7 trillion will pass through their hands between 2017-2020. That’s a lot of spending power!
And like the older folks, Millennials are also migrating to urban areas, particularly to southern and western cities. In the past 10 years, college student migration has been highest to Texas, Georgia, Arizona and North Carolina.
Millennials are generally more focused on value, experiences, sustainability and technology. And they are less likely to own homes and automobiles. Consequently, they will create considerably different investment opportunities than the Boomers.
Here are a few industries that should benefit:
Sectors that will Benefit
- Apartment rentals (REITs)
- Travel & Leisure
- Healthy, higher quality food
Millennial Spending Power should Boost these Millennial Stocks
Here are several stocks that we have recently covered in my Wall Street’s Best Investments newsletters that I believe hold significant opportunity to benefit from the growing Millennial population. Let’s call them millennial stocks.
Commenting on Facebook Inc. (FB), contributor Jon Markman, editor of Pivotal Point, noted, “The Journal reports Facebook managers are seeking $1 billion in investment from Mastercard (MA), Visa (V) and First Data Corp. (FDC) for a new cryptocurrency based on government-issued securities. The benefits of this approach are obvious. Bitcoin is unusable as an actual currency. Volatility is too high. Say what you will about fiat currencies like U.S. dollars, but the benefit is the cost of buying a loaf of bread at the local supermarket doesn’t rise and fall during the day.
“Tying a digital currency to government-issued dollars brings price stability. It also brings the presumed cost savings of blockchain technology. And restricting access to trusted players like Visa and Mastercard, reduces the number of moving parts. This should allow the back end to scale to meet the demand of billions of users conducting millions of transactions every minute.”
Another millennial stock is Lululemon Athletica Inc. (LULU), recommended by Dan Sullivan, editor of The Chartist. Dan commented that “Lululemon’s first-quarter net revenue was $782.3 million, an increase of 20% compared to the first quarter 2018. On a constant dollar basis, net revenue increased 22%. Gross profit was $421.7 million, an increase of 22% compared to the first quarter of fiscal 2018. Diluted earnings per share were $0.74 compared to $0.55 in the first quarter of fiscal 2018. The company ended the quarter with 455 stores.”
Our third millennial stock comes from our own Mike Cintolo, chief analyst of Cabot Growth Investor. He recently recommended Snap Inc. (SNAP), saying, “The first couple of years of this stock’s life were brutal, but new management and a slew of new products (including more camera-based and some augmented reality offerings, video collections, games and even a bit of original content) and technology (including a new Android app that loads faster and has boosted engagement) helped the user count to increase in Q1 (to 190 million) and kept revenue growth strong (up 39% in Q1, expected to be up 30% to 40% both this year and next).
“Earnings are still in the red but quickly approaching breakeven, and the stock’s action is hard to ignore—it broke out to new recovery highs on the first day off the market’s June low, surged as high as 15 and has paused on light volume since.
“We’re starting a position here with an initial loss limit just under 12. BUY A HALF.”
And Joseph Parnes, editor of Shortex Market Letter, added, “The social media giant added 13 million daily users in the quarter, the largest gain since 2017. The daily user base increase of 7% from the previous quarter, taking the total to 203 million, sounds modest but is a far cry from the three (prior) quarters of declines.”
The rising Millennial generation comes with diverse strategies for profitable investing in growth companies. There are many more stocks that will benefit from these trends, but I hope that these ideas will give you an entrée to profiting from investing in these key demographic developments.
Nancy Zambell, Editor of Wall Street’s Best Investments, has spent 30 years helping investors navigate the minefields of the financial industry. Nancy scours more than 200 advisories and research reports to select the top recommendations, which she collects for you in this easy-to-read digest.Learn More