Editor’s note: This article is part of InvestorPlace.com’s Investing for the Next Decade.
The year 2020 will not soon be forgotten. At the same time, it can’t be over soon enough. If you’ve been paying close attention you can see that it’s more than the calendar that’s changing. Millennials are moving into the investing scene. They’ll be approaching 50 by the year 2030, so it’s likely millennial investors will define investing for the next decade.
This generation is looking for something very distinct from previous generations. Yes, tech stocks are still in fashion. But beyond that, millennial investing is about supporting their values. Issues like sustainability and climate change are on this generation’s radar. But so are things like convenience and the opportunity to be immersed in an authentic experience.
By the most popular stocks on the Robinhood app, you can see this generation isn’t risk averse. That may come in time. But even with their affinity for buying cheap stocks, you can see that they’ve also looked at stocks that fit their worldview.
The overarching values of this generation is something you need to be aware of as you consider what millennial investing may mean for your portfolio. Some of the stocks and sectors that have been traditional performers may fall by the wayside.
- Beyond Meat (NASDAQ:BYND)
- Chipotle Mexican Grill (NYSE:CMG)
- Winnebago (NYSE:WGO)
- PayPal (NASDAQ:PYPL)
- Coffee Holding (NASDAQ:JVA)
- Lululemon (NASDAQ:LULU)
- Ford (NYSE:F)
- Southwest Airlines (NYSE:LUV)
- Tripadvisor (NASDAQ:TRIP)
Here are nine stocks to look at as you consider investing for the next decade.
Beyond Meat (BYND)
Being socially responsible is a tenet of millennial investing. And Beyond Meat fits nicely into that conversation. Livestock is responsible for approximately 15% of greenhouse gas emissions. That makes ranching one of the largest contributing factors to climate change.
Therefore, a plant-based meat substitute like Beyond Meat would seem like a reasonable solution. In fact, a report by the Good Food Institute showed that sales of plant-based meat substitutes increased by 23% from 2017 to 2018.
However, Beyond Meat is more than just a play on the plant-based trend. While millennials do enjoy cooking, they value convenience. And that is being reflected in sales of frozen food. However, millennials are expecting higher quality in the frozen food they select. This is another catalyst for Beyond Meat.
BYND stock, however, has not shown the ability to be consistently profitable. Several of their trial programs with restaurant chains have failed to stick with consumers and its current products are expensive. Still, this is a good stock for the long term that gets written off yet keeps coming back.
Chipotle Mexican Grill (CMG)
Millennials love take out. In fact, 40% of millennials eat on the go, birthing the growth of the fast casual industry. Perhaps no stock has demonstrated the ups and downs of that sector better than Chipotle Mexican Grill. The company has risen like a phoenix from the ashes from not one, but two scandals. The first was a food safety scandal. The second was a consumer privacy scandal.
In both cases, the company has addressed the problem head on and CMG stock is currently trading near record levels. The chain is hitting all the right notes with a generation that desires healthy, fresh food options. The company also changes their menu frequently, which adds to its appeal.
Plus, the company was a pioneer in digital ordering prior to the pandemic. So when the pandemic hit, the company was in a much better position to capture those sales. And did they ever. In the last quarter, the company cited nearly 50% of its total revenue (48.8%) came from digital sales.
The great American road trip is coming back. As much as millennials are thought to be always connected, they are not as social as prior generations. I guess I would call it “selectively social.”
One hallmark of this generation is their love of a good camping trip. As they move into middle age, I suspect that recreational vehicles will hold some allure. They can travel in comfort while staying connected and socially distant.
Winnebago posted strong earnings in October. The company showed that it is moving past the declining sales they had during the worst of the pandemic mitigation efforts. Analysts seem to agree. The stock is over 30% below its 12-month price target.
2021 may still present some virus-induced challenges, but this is about investing for the next decade. Winnebago offers investors an experience that’s hard to replicate. They are not alone in the industry, but at this point they form a duopoly with Thor Industries (NYSE:THO). WGO stock is looking like a stock that is reasonably priced today.
Are millennials avoiding the big banks altogether? There’s no evidence of that, but they are supplementing the way they view traditional banking. In the age of financial technology (fintech), millennials are finding alternatives to managing money in ways that are becoming increasingly like a traditional bank.
Take, for example, PayPal. What started out as a payment service largely focused on consumers paying small businesses keeps on finding ways to innovate. PayPal account holders have the ability to get debit cards, credit cards, and even short-term business loans directly through PayPal. PayPal’s peer-to-peer service, Venmo, is also extremely popular among millennials.
Despite the pandemic, PayPal has posted a year-over-year increase in revenue for the last seven quarters and analysts are rating the stock as a solid buy. As 2020 comes to a close, PayPal is knocking on the door of its current 12-month price target. However, if the company posts another solid earnings report, it’s likely that the company’s target will move higher. In the last month, three analysts have raised their price targets on PYPL stock.
Coffee Holding Co. (JVA)
Millennials and coffee seem to go together like peanut butter and jelly, so you might think Starbucks (NASDAQ:SBUX) is a logical play here. And it may very well be.
However, when you think about investing for the next decade, many investors are looking for boutique coffee roasters that make quality organic grounds. That description certainly fits Coffee Holding Co. Forbes touted the company as one of its “Best Small Companies.” But that was in 2011. And many small players have fallen by the wayside.
Can Coffee Holdings be different? It’s possible. The price of coffee may be going up. If it doe,s that would likely mean JVA stock will be going higher. The stock is up over 100% since the onset of the pandemic.
This is a stock with plenty of risk as most penny stocks are. Still, if you’re interested in a play on a company that is in line with millennial investing, Coffee Holdings is an intriguing play.
Look good, feel good. That could be a mantra of millennials. This is a generation that embraces fitness and athleisure style. The pandemic closed gyms and yoga studios, but millennials brought those activities indoors. This has created heavy demand for fitness stocks like Peloton (NASDAQ:PTON).
Lululemon has gotten into this workout-at-home trend with its acquisition of the tech company Mirror. This doesn’t change Lululemon’s core athleisure business, but it certainly enhances it.
And that core business continues to grow. The company’s sales grew by 2% in the last quarter. When you consider most of its stores were closed, this is an impressive testament to its e-commerce business. It also highlights that the company has moved beyond the female consumers and is designing clothes that are appealing to men as well.
LULU stock is up nearly over 42% for the year. And as you look at investing for the next decade, this looks like one of the most enticing fitness — and now tech — stocks you can own.
This is a little bit of a contrarian opinion as there is research that says millennials prefer foreign vehicles. But they also are increasingly showing interest in electric vehicles (EVs). This is evident in their love for all things Tesla (NASDAQ:TSLA).
However, F stock is among the top stocks on Robinhood. One reason for this is that these investors also remember the financial crisis. Specifically, they remember that Ford did not (technically) receive a bailout from the federal government.
But the real story is that Ford has been committed to electrification. The fruits of that labor look like they are about to pay off. Mark Hake recently wrote about the significance of new chief executive officer (CEO) Jim Farley. Farley has vowed to, among other things, “produce compelling uniquely Ford electric vehicles at scale; and stand up new AV-enabled businesses.”
Talk is cheap. But then again so is F stock. And that’s what might make it another example of investing in the next decade.
Southwest Airlines (LUV)
Millennials love to travel and are willing to cut corners in other areas of their life (including taking lower paying jobs) that will allow them more freedom to do so. Are they right? Time will tell.
There is already some evidence that airline traffic is slowly coming back. It’s reasonable to expect that millennials would be leading this comeback as they are among the lowest risk group for the novel coronavirus.
But that doesn’t mean that they’re not looking to save money. The reason why I like Southwest Airlines at this time is that they are a lower cost carrier that does not have as much international exposure as the other major airlines.
Even as Warren Buffett is exiting the sector, millennials are rushing in to buy airline stocks. And LUV stock has been among their favorites, but this remains a risky play. Southwest’s CEO Gary Kelly announced a 10% paycut for employees to avoid furloughs. However, the company may receive a lifeline if Congress extends the payroll support program.
Another way to play millennials’ affinity for travel is through a niche travel stock like Tripadvisor. Millennials are looking for an authentic experience when they travel. With that in mind, it’s been a rough year for TRIP stock.
Back in April, I wrote that investors would be best to stay away from the stock due to high unemployment among millennials. That trend may be starting to reverse. Plus, there are already signs that people are seeking out safe travel experiences. The company may also get a bullish benefit from the current antitrust lawsuit against Google (NASDAQ:GOOGL, NASDAQ:GOOG). Tripadvisor believes that Google Search gives it an unfair advantage.
Investing in TRIP stock is not without risk. Even if there is not a full-scale lockdown, the potential exists for more mitigation efforts related to the rising number of virus cases. But as a long-term play on investing for the next decade, I like where TRIP is at. Analysts give the stock a 35% upside from its current level.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019.