Editor’s note: This article is part of InvestorPlace.com’s Investing for the Next Decade.
For the vast majority of people, putting money to work on Wall Street is part of a longer-term strategy for financial security and independence. But with the novel coronavirus imposing a new normal, it’s difficult to know which assets to buy for next week, let alone investing for the next decade or two. Yet this is the challenge for so-called Generation Z stocks.
By 2030, those in this emerging generation will have reached adulthood (approximately 18 to 30 years of age). Further, due to the enormous changes that we have seen both in terms of technological innovations and social mores, the strategies that may have been relevant for millennials and older demographics might not resonate as much, if at all.
According to a Pew Research Center study, public trust in government since 1958 has generally been declining. Moreover, the current Trump administration has suffered historic lows in trust. Now, this research was published in April 2019. Given how poorly the White House has handled the coronavirus epidemic, it’s doubtful that public trust has increased. We’ll find out soon enough.
However, that sets the stage for one of the biggest themes for investing for the next decade: an emphasis on environmental, social and governance (ESG) concerns. As InvestorPlace web content producer Sarah Smith noted, it’s not just enough for young people to be profitable. Instead, they want to know that they made a positive contribution to sustainability and society. That’s one of the pivotal factors that separates Generation Z stocks from other narrative-focused investments.
Another factor that will determine the most viable strategies for investing for the next decade is an obvious one: the Covid-19 pandemic. As the Washington Post reported in October of last year, an “economic crisis in your teens can alter your behavior for life, economists find.” Not only is this a wide-ranging crisis, it’s also unprecedented in modern American history. Therefore, these 10 Generation Z stocks could enjoy enormous relevance over the next 10 years:
- NextEra Energy (NYSE:NEE)
- Unilever (NYSE:UL)
- Panasonic (OTCMKTS:PCRFY)
- American Well (NYSE:AMWL)
- 3M (NYSE:MMM)
- Home Depot (NYSE:HD)
- Upwork (NASDAQ:UPWK)
- PayPal (NASDAQ:PYPL)
- Netflix (NASDAQ:NFLX)
- Match Group (NASDAQ:MTCH)
Finally, we should consider how the new normal will impact almost every aspect of young workers’ lives. From how they conduct transactions to what type of entertainment they consume, even to how they meet that special someone and create the new generation of young Americans, Generation Z stocks should have a long shelf life.
On that note, let’s dive into the pertinent companies that will likely form the basis of investing for the next decade.
NextEra Energy (NEE)
When a Democratic presidential candidate gets fact-checked by ‘fake’ news network CNN, that raises eyebrows. Yet that’s exactly what the Stalinist media regime did, calling out former Vice President Joe Biden for lying about never opposing fracking during the final presidential debate.
Perhaps CNN is being a little bit less fake these days?
The more important issue, though, is that while the oil industry has bristled at Biden’s suggestion that fossil fuels will be transitioned out, this issue isn’t really political. Rather, it’s more the changing of the times. Several years ago, zero emissions were more fiction than science. Now, it’s a reality thanks to renewable energy companies like NextEra Energy.
Not surprisingly, enthusiasm kicked in for NEE stock following the debate, but it was only modest. When you look at the broader trend, shares are up nearly 200% over the past five years. Essentially, the people are ready for renewables and no election cycle will change that.
Sure, President Trump could win a second term and that might help the oil industry out. But again, the general trend for investing for the next decade is that younger people care about clean energy. Eventually, even the Republicans will have to start talking green to win votes. That’s a huge plus for NEE stock, potentially one of the biggest winners among Generation Z stocks.
Although many of us use and consume Unilever products, the company suffers from one incontrovertible fact: it’s terribly boring. Indeed, the consumer goods giant is so boring that Dutch stakeholders of UL stock generated headlines that they overwhelmingly support a proposal to transfer the multinational structured Anglo-Dutch company into a sole London-based entity.
Don’t get me wrong – this has significant implications for UL stock. But in the year of Covid-19, this news item was a snoozer. And yes, decisions here could trigger Dutch exit taxes. Again, the point remains that Unilever isn’t exactly a sexy outfit.
However, what it lacks in popular appeal it more than makes up for with its ESG proposals, particularly its United for America initiative. As you know, the coronavirus pandemic has imposed a disproportionate impact on women and communities of color. To address this problem and other systemic issues, Unilever has proposed a multi-tiered program, including donations for deeply affected communities and addressing the education gap.
Of course, not everyone is onboard with outright ESG initiatives, with some labeling them “snowflake-y.” However, if your intent is to best position yourself for investing for the next decade, Generation Z stocks tied to socially aware organizations will likely fare much better than those which are anachronistic.
If it weren’t for the novel coronavirus, 2020 may well be known as the year of the electric vehicle. For many investors, this was the first time they heard about special purpose acquisition companies, or SPACs. And what a trial by fire this was! Although SPACs encompass multiple industries, they predominantly have been the vehicle of choice for EV makers wanting to go public.
But that’s not the only reason why EVs represent a major theme for investing for the next decade. Despite a terrible economic crisis, companies like Tesla (NASDAQ:TSLA) hit absurd highs. Though Tesla EVs aren’t cheap, their electric platform (thanks to fewer moving parts) makes them less susceptible to global supply chain disruptions. As we saw earlier in this crisis, combustion engine cars weren’t so fortunate.
However, picking which EV company to bet on will potentially become more difficult due to rising competition. After all, because EVs have fewer parts, they are theoretically easier for anyone with a modicum of credibility to manufacture. Thus, Gen Z may want to consider Panasonic and specifically PCRFY stock.
With Panasonic, you’re getting a proven player in the lithium-ion battery technology. Sure, you can swing for the fences with organizations claiming they found the key to paradigm-altering solid-state batteries. Realistically, though, PCRFY stock will give you consistent relevancy without having to sift through individual EV winners and losers.
American Well (AMWL)
Prior to the pandemic, telehealth companies like American Well offered convenience and time savings in an increasingly busy world. Particularly, parents who have multiple responsibilities may find themselves overwhelmed juggling near-impossible schedules. But thanks to technology, these folks don’t have to sacrifice their own health. Simply log onto your device and get a medical consultation in the privacy of your own home.
Convenience will continue to be a key theme of investing for the next decade. Therefore, I anticipate AMWL stock – and rivals like Teladoc Health (NYSE:TDOC) – to reach fresh plateaus in the post-pandemic period. And the next few months should also provide nearer-term confidence for American Well investors.
According to The Lancet, a peer-reviewed medical journal, “front-line health-care workers had at least a threefold increased risk of COVID-19. Compared with front-line health-care workers who reported adequate availability of PPE, those with inadequate PPE had an increase in risk. However, adequate availability of PPE did not seem to completely reduce risk among health-care workers caring for patients with COVID-19.”
This is a scary revelation. Essentially, the only safe contact with someone who has Covid-19 is no contact at all. In this case, AMWL stock truly stands out as being extremely relevant among Generation Z stocks.
Even beyond the pandemic, many young people will likely be mentally scared from this crisis. Therefore, I see a long (albeit cynical) pathway for upside for American Well.
When watching social media channels, I noticed that many people have adapted the elbow tap – I’m not sure what the technical term is – in lieu of the handshake. While this might seem a ridiculous notion, it’s possible that we could see new mechanisms of greetings moving forward.
Honestly, I’d wager that virtually all of us were surprised at how long this pandemic has affected us. And with new daily coronavirus cases surging to all-time highs just days before the election, it seems the second wave is upon us. This dynamic will probably reinforce the need for novel greetings.
Or, America and the west can do what the Asians have done for decades: wearing face masks as part of everyday custom to help prevent the spread of disease to others. Quartz contributor Jeff Yang detailed an interesting history of why Asians’ penchant for mitigation efforts predates the coronavirus. According to Yang, Japan’s struggle with the 1918 influenza pandemic, along with domestic natural disasters, prompted voluntary mask wearing, a practice that extended for multiple generations.
Logically, then, it’s possible we could see greater importance for industrial giant 3M, which would bode well for MMM stock. Yes, I just mentioned that personal protective equipment isn’t completely failproof when surrounded by Covid-19 patients. But when social distancing is not an option, it’s best to go with 3M’s N95 respirators.
Plus, I don’t think it’s a ridiculous notion that MMM stock could rise over the next several years due to Covid-19. Trauma and its lingering effect will be a theme of investing for the next decade, there’s no doubt about that. While 3M is anachronistic in many other ways, it has also become one of the long-term Generation Z stocks to buy for 2030 investing.
Home Depot (HD)
Regarding strategies focused on investing for the next decade, Home Depot is admittedly a strange choice. After all, you’d think that Generation Z stocks are all about technology and other sectors that benefit from flashy headlines. HD stock? This is what young investors would call boring as stink (well, they’d use other language but that’s a story for a different day).
Additionally, millennials don’t have a reputation for being handy with things that don’t involve apps. For instance, the British news outlet Independent reported that a majority of millennials don’t know how to change a tire. For older generations, such skills were handed down from parent to child. Not so with the digitally inclined demographic.
Frankly, before Covid-19, the “zoomers” were also headed toward the same direction. But my theory is that we will see a dramatic shift in this thinking. Zoomers, who are in their tweens or teenage years, have witnessed firsthand how fragile our government is when a “real” crisis strikes. Determined not to be so vulnerable the next time around, Gen Z will look to be self-sufficient.
Not only does this benefit HD stock, but it also is in line with other Generation Z stocks that are geared toward ESG plays. For instance, living off the grid wasn’t practical without solar energy. But thanks to green energy infrastructure, independent living is becoming a reality. Therefore, I gravitate toward multi-relevant companies like Home Depot as a basis of investing for the next decade.
As you can imagine, the gig economy was a massive topic well before the pandemic. To be fair, millennials really forged this path toward independent professionalism. Refusing to be tethered to a workplace for income, people in this demo preferred flexibility.
Not only that, enough millennials felt this way that the gig economy became a substantial component of the broader economy. In May of last year, Mastercard revealed that the independent work industry was on its way toward becoming a half-a-trillion dollar sector. But with the disruption of the coronavirus pandemic, the projected trends for the gig economy’s gross volume are probably understated.
Mainly, I say this because prior to the crisis, independent work was a choice. Today, it’s mandatory – at least when you’re talking about the methodology of the gig economy. True, most of the people who have been forced to work remotely are still classified as employees. But that might change over the next few years, which is supportive of Upwork and UPWK stock.
With Upwork, the platform connects corporate clients seeking help for short-term projects and the talent that can fill that gap. In this way, clients save significant money on overhead while independent contractors get money for their skill sets. It’s no wonder then that UPWK has been a hot performer this year.
Finally, companies like Upwork will probably do away with controversial initiatives like affirmative action once and for all. In the gig economy, the emphasis is on your work and your professionalism, not what color your skin is. More than likely, this will have huge implications for investing for the next decade.
One of the reasons why investors really need to pay attention to the gig economy regarding Generation Z stocks to buy is that extremely turbulent events tend to change youth culture. In turn, this may have serious bearing on society decades down the road. For example, here’s what associate professor Daniel J. Meissner of Marquette University stated regarding youth during the Great Depression:
Many teenagers of this period were known for “riding the rails.” Teenagers who felt that they were a burden to their families or were ashamed of their unemployment and poverty felt the need to leave their homes to find a life of their own. They wanted to take the adventure of living on their own and trying to find a better life. During the height of the Depression, 250,000 teenagers were roaming around America by freight trains. Some people admired these teenagers for their spirit while others feared them as potentially dangerous. About eighty-five percent of these teenagers were in search of employment.
Therefore, the gig economy in part reflects not only independent professionalism but also an independent spirit. Naturally, this bolsters the case for PayPal, which already offers powerful applications for our increasingly digitalized societies. Of course, you only need to consider the price chart of PYPL stock, which is on course to potentially doubling this year.
Moreover, PayPal is an underappreciated ESG play. I suppose that digital payments is good for the environment because it saves paper. But more significantly, PYPL stock is levered toward assisting the unbanked and underbanked, a challenge that the pandemic only exacerbated.
When the novel coronavirus ceased to be a foreign crisis and instead became a domestic one, federal and state government agencies responded, implementing various shelter-in-place orders, as well as mandatory quarantining for compromised individuals. As well, you have the various social distancing and mitigation initiatives that are still being forwarded by health agencies.
Cynically, this was a horrific dynamic that hurt in-person entertainment venues like movie theaters but benefitted in-home options, such as streaming. Of course, 2020 became the year of Netflix, which saw a ridiculous spike in subscribers. It wasn’t just the lockdowns that helped drive up demand, but rather the obsolescence of traditional TV subscriptions. Without live events, there wasn’t much need for these expensive outlays and thus, NFLX stock soared.
Still, recent data from Netflix reveals that coronavirus-fueled sub count has declined significantly in magnitude. As a result, some might be tempted to abandon NFLX stock for more presently relevant names. However, if you’re focused on investing for the next decade, you may want to hold on to the streaming giant.
Interestingly, in the second quarter of this year, 46% of Netflix’s new subs came from the Asia-Pacific region, sparked by demand in Japan and South Korea. Generally, I would classify these two countries as high-trust regions. Therefore, that the Japanese and Koreans still apparently eschewed movie theaters for streaming tells you that Asia may be gravitating toward the online platform. And that could be a huge impetus for NFLX and similar streaming companies and in-home entertainment platforms.
Match Group (MTCH)
To round off this list of Generation Z stocks, I’m going to end with perhaps my most controversial idea, Match Group. On the surface, MTCH stock seems like an easy pick for portfolios specializing in investing for the next decade. When e-dating became a thing, it was derided as a platform for losers. Now, 30% of U.S. adults have tried online dating, suggesting that the stigma is declining.
And of course, the coronavirus pandemic has completely changed the nature of the dating game. Today, the idea of going to the bar or club to meet someone seems unnecessarily risky. Sure, there is a possibility that pent-up demand could see a big boost for these businesses when they are allowed to fully reopen. But because of the trauma associated with the pandemic, many young people may decide to stick with a contactless approach first.
Essentially, we could see a dramatic shift in interpersonal relationships that could make MTCH stock even more relevant than it already is. Many zoomers today are impressionable children. For almost a solid year – and this could possibly go on longer – parents, teachers and the media have inundated them with messages about social distancing and what not.
When they become young adults, they may carry these lessons – the validity of said lessons is a different discussion – into their dating life. Frankly, we could see many reluctant to start off with physical displays of affection. Rather, they may rely on contactless dating first, which makes Match Group an ideal choice for investing for the next decade.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.