When choosing the best retirement stocks for Gen-Z investors, I selected the shares of rapidly growing companies that have exceptionally strong products, face little competition and are either profitable or very well-positioned to become profitable.
When picking stocks that you intend to buy and hold for decades, it’s important to identify companies that have excellent chances of generating great financial results for many years.
Firms that are on top of their sectors, face little competition and are already in the black are quite likely to increase their top and bottom lines by huge amounts over the years.
Additionally, I selected companies whose technology is great. Of course, we live at a time when amazing, life-changing technologies, such as self-driving vehicles, artificial intelligence, green hydrogen, huge wind-energy turbines, and the cloud – are proliferating tremendously.
The stocks of the companies that successfully exploit those technologies are likely to climb a great deal for many decades to come.
|TAN||Invesco Solar ETF||$87.98|
|LIT||Global X Lithium & Battery Tech ETF||$0.06|
Roku (NASDAQ:ROKU) is one of the best retirement stocks for Gen-Z investors because the company has a leading streaming TV operating system, and streaming TV’s share of the overall TV market continues to grow. In July U.S. consumers spent more time streaming video than on any other TV activity for the first time ever.
Since advertisers tend to “follow the eyeballs,” Roku is very well-positioned to, over the long-term, generate a tremendous amount of ad revenue. Roku’s impressive partners show how alluring its platform is for large marketers.
Among the huge marketers that ally with Roku are Walmart (NYSE:WMT), Best Buy (NYSE:BBY) and Warner Bros. Discovery’s (NASDAQ:WBD) HBO Max.
On the technology front, Roku allows marketers to use interactive ads, combining the high entertainment value of conventional TV and the interactivity and measurability of internet ads.
Although I haven’t been a big fan of Cathie Wood’s over the last couple of years, I agree with her bullish thesis on ROKU stock.
In her “base-case” scenario Roku’s revenue will grow at a rapid, average annual rate of 39% through 2026. ARK’s base-case scenario also calls for Roku’s EBITDA margin, excluding certain items, to reach a strong 29% in 2026, up from 17% in 2021.
ServiceNow’s (NASDAQ:NOW) software enables companies to accomplish certain tasks automatically that used to have to be carried out by IT employees.
As a result, the company allows its clients to “drive better productivity, greater efficiency and cost savings,” in the words of its CFO, Gina Mastantuono. In good, bad and mediocre economic times, many companies will be happy to buy products that save them money.
So it’s not at all surprising that the CFO last month stated that the company was continuing to benefit from vigorous demand and a “strong pipeline.”
Although Mastantuono reported that it’s taking ServiceNow longer to close some deals, she reiterated the company’s previous 2022 guidance. And if NOW meets that guidance, its subscription revenue will jump 24% this year versus 2021. Given that strong growth outlook, I believe that competition is not a major problem for NOW.
Meanwhile, analysts, on average, expect the company’s earnings per share to come in at a robust $9.24 next year, showing that the firm is generating strong profits.
Invesco Solar ETF (TAN)
Under the health and energy spending bill passed by Congress last month, 30% of all the money spent on solar projects in the U.S. will be refunded in the form of tax credits for both businesses and individuals.
That’s up from a 26% tax credit in 2021, and the credit had been scheduled to gradually fall over time. Moreover, the 30% tax credit will be intact for a record amount of time: ten years.
All of the components of the Invesco Solar ETF (NYSEARca:TAN) will benefit from that provision for many years.
Geopolitical issues in Europe are meaningfully boosting the sales of the many solar companies with TAN that sell their products to customers on that continent.
With the EU’s efforts to diversify away from fossil fuels in general and Russian gas in particular likely to continue, TAN stock is definitely one of the best retirement stocks for Gen-Z investors.
Global X Lithium & Battery Tech ETF (LIT)
The Global X Lithium & Battery Tech ETF (NYSEArca: LIT) is one of the best retirement stocks for Gen-Z investors.
Earlier this month research firm Benchmark estimated that the “Demand for lithium-ion batteries is set to grow six-fold by 2032.” As a result, the firm estimates that 300 additional lithium mines have to be built between now and 2035 to keep pace with demand.
In other words, both lithium miners and lithium battery makers are going to be able to sell as much as they produce for years and decades to come. That, of course, is great news for companies that mine lithium and firms that produce lithium-ion batteries, as both types of companies are poised to benefit from insatiable demand and high prices for the foreseeable future.
Stem’s (NYSE:STEM) software utilizes artificial intelligence (AI) to maximize the utility of electricity storage systems and batteries. It also offers solar energy monitoring systems.
Given the rapidly increasing popularity of battery storage systems and solar energy, Congress’ recent authorization of tax breaks for many types of such systems for the first time, and the electrification of transportation, STEM is well-position to benefit from very strong demand for its products.
Other positive catalysts for Stem and STEM stock are the increased complexity of the grid in light of the increased use of renewable energy and higher electricity prices both in the U.S. and Europe. Moreover, all of those trends are poised to continue for many years to come.
Stem’s top line soared 2.5 times YOY last quarter to $67 million, while the company raised its 2022 bookings guidance to a record $775 million-$950 million from $650 million-$750 million. At the midpoint of the new range, the company’s bookings would jump over 20% versus 2021.
Clearly, Stem’s business is growing very rapidly. Analysts, on average, expect the company to become profitable in 2024.
Alphabet’s (NASDAQ:GOOG) ad business revenue climbed 12.6% YOY last quarter, while even its operating income increased a bit YOY, reaching $19.45 billion.
Google Search’s top line jumped an impressive 13.5% YOY, showing that, unlike Meta (NASDAQ:FB) and Snap (NYSE:SNAP), Google ads are a “must-have” for advertisers.
Google Cloud is clearly gaining market share and becoming a meaningful part of Alphabet’s revenue, as the unit’s top line soared 35.6% YOY.
Using a sum-of-the-parts-valuation method that gives Google Cloud a value of $339 billion, Seeking Alpha columnist Julian Lin estimates that GOOG stock is worth “at least $144 per share. versus the company’s current share price of $112.
Moreover, in the decades to come, the company’s Waymo self-driving unit and its Google Fiber business, which should take market share away from existing internet service providers, are well-positioned to generate significant revenue and profit for the company.
In a previous column, published in May, I predicted that Orstedm (OTC:DNNGY) would be a big beneficiary of Europe’s need to obtain new sources of electricity.
That thesis already appears to be playing out, as the offshore wind energy company’s EBITDA soared 48% YOY to $1.55 billion dollars. Orsted more-than doubles raised its EBITDA guidance.
Orsted continues to win impressive new deals, make needle-moving acquisitions and move into additionallucrative types of renewable energy.
In July, the company won a deal to build a 2.85-gigawatt offshore wind project, Hornsea 3, off the coast of the UK. The project will become “the world’s single biggest offshore wind farm,” according to the firm. And in April, Orsted was awarded New Jersey’s 1.2 gigawatt offshore wind project.
Finally, one of Orsted’s joint ventures has won a contract to provide an 880-megawatt offshore wind project to New York.
Last year, the company acquired an Irish onshore wind energy firm, entering the European onshore wind energy market. Moreover, it has “signed an agreement to acquire the German and French onshore developer, Ostwind”. and it has formed four partnerships to enter the Spanish onshore-wind market.
Orsted has entered the red-hot green hydrogen sector, and it’s developing a large-scale green jet fuels project in its home market of Denmark.
On the macro front, Orsted is set to get a big boost from both new wind-energy tax breaks in the U.S. and a deal by the governments of Denmark, Germany, Belgium and the Netherlands to create “at least 150 gigawatts of offshore wind [in the North Sea] in 2050.”
On the date of publication, Larry Ramer held a long position in STEM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.