There’s no doubt that America is aging. The numbers do not lie. The demographic shift is having an effect on many markets, the stock market included.
Straight from the Census Bureau: “The U.S. population age 65 and over grew nearly five times faster than the total population over the 100 years from 1920 to 2020, according to the 2020 Census.”
As individuals, we may not be able to stem the tide of the shift but we should look for the opportunity in the trend. As investors, the best approach is to direct our capital toward stocks that benefit from an aging population.
Life Time Group Holdings (LTH)
Life Time Group Holdings (NYSE:LTH) is a stock that capitalizes on the rapid growth of pickleball. Pickleball is America’s fastest growing sport and one that is popular with older athletes.
The statistics underpinning the growth of pickleball are astounding: 159% participation growth over the past 3 years. Growth isn’t expected to continue at such a torrential pace but should grow at nearly 8% annually through 2028.
So, where does Life Time Group Holdings fit into the picture? The answer is that the company is investing heavily in pickleball courts. The firm recently opened 22 additional courts in the Houston area with a goal of bringing its total to 100+ in that market. Life Time Group currently operates approximately 600 courts and intends to expand to 1000 pickleball courts by the end of 2024.
The firm’s solid fundamentals make the choice of investing that much easier. Revenues increased more than 20% in H1 and Q2 of this year and the company has found profitability. It’s absolutely worth considering in relation to our aging population and recreation trends in general.
CareTrust REIT (CTRE)
CareTrust REIT (NYSE:CTRE) is a firm that owns, acquires, and leases healthcare properties. Some aging people lose their ability to maintain homes, Thus, independent living, memory care, and assisted living stocks are becoming an increasingly attractive niche as America ages.
CareTrust REIT engages in that business and is among the best-rated firms in the sector. That said, most of the opportunity for price appreciation from CTRE stock derives from its dividend. I won’t go deep into a discussion about its dividend, but it hasn’t been reduced since 2014. That suggests relative safety among REITs as many have reduced their dividends since then.
In order to judge the health of CTRE and its dividend we can’t look at a simple payout ratio. It’s 3.17 which suggests extreme distress. It’s more useful to use funds from operations (FFO) and compare there. CareTrust’s FFO suggests health and its dividend pays 5.5%.
Boston Scientific (BSX)
Boston Scientific (NYSE:BSX) stock is performing very well currently. The company markets medical devices used in interventional medicine. These devices span urology, neuromodulation, and cardiology.
It’s clear from the company’s most recent earnings report that Boston Scientific is in a place of strength. Its business is divided into two segments; MedSurg and Cardiovascular. MedSurg grew by 9.6% in Q2 while Cardiovascular increased by 13.4% during the same period. Overall growth reached 11.6% during the period on an organic basis.
Boston Scientific is particularly focused on ablation procedures, stents, neuromodulation procedures and endoscopies. An aging population particularly requires those interventions in increasing numbers which is evident in Boston Scientific’s top line growth.
In 2023, Boston Scientific has performed particularly well and that has prompted Wall Street to become increasingly bullish on its shares which still possess room for growth.
Topgolf Callaway Brands (MODG)
Topgolf Callaway Brands (NYSE:MODG) stock is a stock to buy for positive reasons. Aging isn’t all about healthcare, prescriptions, and finding care for mom and dad. It’s also about the freedom that comes with retirement and the pursuit of recreation with that free time.
Topgolf Callaway Brands owns a large portfolio of leading golf brands that continues to grow. It includes Topgolf, Callaway, Odyssey, Jack Wolfskin and others. Topgolf has become something of a phenomenon and is a driving range with tracked balls. Callaway and Odyssey remain among the best-known clubs in the game.
The company expects to open 11 Topgolf venues in 2023 and has posted seven consecutive quarters of growth. Over growth reached approximately 9% in the second quarter at Topgolf Callaway Brands, allowing the firm to reaffirm full year revenue and adjusted EBITDA guidance.
Overall, the stock exposes investors to a nice mix of growth that leverages a younger audience while fully taking advantage of the increasing senior population.
Royal Caribbean (RCL)
Royal Caribbean (NYSE:RCL) is another stock play that leverages the recreation and travel trends of an aging population.
Let’s start by rewinding a few months in order to understand why RCL shares make sense in the near term as well. Essentially, Royal Caribbean saw better-than-expected demand during the second quarter. It was particularly positively affected by vacation experiences demand. As a result of the strong demand, the company increased its EPS guidance by 33% for the full year.
Royal Caribbean is one of the big three cruise ship firms. That said, investors should pay attention to debt in particular for all cruise ship stocks. They were forced to sit idle as a result of the pandemic. That means high operating costs for the massive fleets without resultant revenues. Debt accrual was a real issue. That said, Royal Caribbean paid down $1.4 billion of debt in Q2. It has an additional $1 billion to pay down this year and $8.1 billion more through 2026.
Exact Sciences (EXAS)
Exact Sciences (NASDAQ:EXAS) remains an intriguing stock for several reasons. Fundamentally speaking, Exact Sciences looks to be ready to break out due to cyclical factors combined with financial performance.
The firm provides cancer screening and diagnostic tests. Its Cologuard product has high visibility and is highly advertised. The firm’s sales are driven by its screening segment which contributed $462.8 million of its $622.1 million in Q2 sales. Cologuard leads the way for the firm and sales increased by 19% overall during the period.
There’s a lot to like about Exact Sciences from those figures. However, the firm is also at the mercy of market cyclicality. It is still producing losses. Growth stocks perform poorly in high rate environments because funding is more difficult. There’s positives to be taken from EXAS in that regard, however. Its loss narrowed from $166 million to $81 million in Q2. We are nearing peak rates and there will come a time in the near future when growth stocks make sense again. The Fed will lower rates again and EXAS will thrive.
NovoNordisk (NYSE:NVO) is a diabetes and obesity-focused firm and stock. It has become especially visible due to Wegovy and Ozempic — which is exactly why investors should consider the firm.
Both drugs are based on the same active ingredient, semaglutide. It works to suppress hormones related to satiation, tricking your body into feeling fuller, faster.
Sales were up 30% in the second quarter with Ozempic and Wegovy expected to be part of a fundamental shift in the treatment of obesity. Novo Nordisk and Eli Lilly are engaged in a pitched battle for dominance in the sector. Both are headed upward because of it.
All of this matters in relation to demographic shifts because the drugs have been shown to reduce the risk of heart attacks, stroke, and cardiovascular death by 20%. The incidence of those diseases increases with age creating a real boon for Novo Nordisk moving forward. NVO is set to experience a period of strong growth as a result of those factors.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.