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How to Invest in the Baby Boom

Profit from boomers — and the 'New American Baby Boom'


I originally had planned on titling this “How to Invest in the New American Baby Boom” as I intended to focus purely on the echo boomers and their young families, but I decided there still is a little money to be made off of the original baby boomers.

Yes, baby boomers are fast approaching retirement and are more interested in saving than spending. But, by virtue of their sheer size and accumulated wealth, they still are a force to be reckoned with. The key is finding the goods and services they still need and want. Here’s a few ways to play both the baby boomers and the New American Baby Boom.

Baby Boomers (NASDAQ:ACOM) is a fine example. As they ponder their legacy to their children and grandchildren, Boomers are more interested than ever in their family histories. And is in a unique position to satisfy that curiosity. Although the stock ended the year down almost 19%, I believe ACOM could be one of my best performers in 2012.

Almost Family (NASDAQ:AFAM) is another stock I see doing well, though I’m still waiting to pull the trigger and buy it. Home health services should see years of increased demand as the elderly population of the country expands in the coming years.

New American Baby Boom

My two 2011 investments in children’s toys have had very mixed results. Mattel (NYSE:MAT) had a great year, ending the year up roughly 20% (including dividends) since my January recommendation. Hasbro (NYSE:HAS) had a rougher go at it, falling more than 32% and erasing the gains I had in the stock from 2010.

Despite their vastly different performances in 2011, I continue to like both stocks. Both are excellent ways to profit from the New American Baby Boom that peaked in 2008. All of the babies born in the mid-to-late 2000s — and those were record birth years, I might add — are now toddlers and young children with an insatiable appetite for toys. This trend still has a few years left in it, and both Hasbro and Mattel are attractively priced and pay more than 3% in dividends. I recommend both for 2012.

Lastly, what’s a new generation without diapers? After a slow start, Huggies diaper maker Kimberly-Clark (NYSE:KMB) ended up having a great 2011. The stock was up nearly 17% including dividends. KMB benefited from an investor flight to safety. As a boring, stable maker of disposable consumer staples, KMB was exactly what investors needed. Though this stock is far from sexy, I recommend investors hold onto it a little longer and continue milking that 3.8% dividend.

Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter, and the chief investment officer of investments firm Sizemore Capital Management. Sign up for a FREE copy of his new special report: “Top 5 Contrarian Stocks for 2012.”

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