The children are the future. Many great leaders have reminded us of this throughout human history. John. F Kennedy once said that “children are the world’s most valuable resource.” Nelson Mandela is famous for saying that “our children are the rock on which our future will be built, our greatest asset as a nation.”
These sayings ring especially true around the holiday season – and perhaps even more so this year, amid a disruptive pandemic that has kept many families from seeing one another.
The children are the future…
At Hypergrowth Investing, we like to invest in the future.
So, by the transitive property, investing in the future means investing in the children.
That sounds like something that should be written on a Hallmark Christmas card. It’s cheesy and true. But what does it actually mean?
It means that that if you want to make serious money by investing in hypergrowth megatrends, you need to forget the preferences of older folks, and invest in what the kids are buying and doing.
After all, older folks are losing their economic influence and purchasing power…
Over 80 million Baby Boomers will file for retirement benefits over the next 20 years – amounting to 10,000 people per day.
Once the bedrock of the workforce, Baby Boomers’ presence in the office will shrink from 31% of workers in 2015, to just 8% of workers by 2030.
Who is taking their place?
The children, of course.
Generation Z – broadly defined as individuals born after 1996, so the 24-and-younger crowd – comprised a measly 4% of the global workforce in 2015.
By 2030, that share is expected to rise to 22%… by 2040, it’ll likely measure 40% or more.
More Gen Z folks getting more jobs means more Gen Z folks getting more money.
According to Bank of America, Generation Z’s direct purchasing power is set to grow 400% over the next decade to $33 TRILLION – comprising more than a quarter of global purchasing power by 2030.
Here’s how Bank of America sums up this seismic demographic shift in spending power and economic influence:
“The Gen Z revolution is starting, as the first generation born into an online world is now entering the workforce and compelling other generations to adapt to them, not vice versa.”
The Gen Z revolution…
I like the ring of that – because that’s exactly what is happening. It’s a global economic revolution wherein the world’s spending power is being transferred from older folks to younger folks.
The products and services that are winning over the hearts (and wallets) of these younger consumers are the ones positioned for a decade of hypergrowth ahead.
Investing in those products and services is the key to unlocking enormous gains over the next 10-plus years.
So… what products and services do Gen Z consumers like?
Hint: They are very different from the products and services most Baby Boomers like.
For starters, only one in four Gen Z consumers watches broadcast TV. The death of old-school linear TV is all but certain amid the Gen Z revolution. Streaming TV services will take over the world. That’s great news for names like Netflix (NASDAQ:NFLX), Roku (NASDAQ:ROKU), and FuboTV (NYSE:FUBO).
Meanwhile, four in five Gen Z consumers factor ESG impacts into their money decisions. Two-thirds say their next car will be electric. Half say they eat plant-based meat at least once a month. More than 60% prioritize sustainability when shopping.
Of course, that’s bullish for top EV stocks like Tesla (NASDAQ:TSLA), NIO (NASDAQ:NIO), Blink Charging (NASDAQ:BLNK), and Arrival (NASDAQ:CIIC). It’s also bullish for emerging plant food stocks like Else Nutrition (OTCMKTS:BABYF), Very Good Foods (OTCMKTS:VRYYF) and Laird Superfood (NYSEAMERICAN:LSF), as well as clean energy stocks like Plug Power (NASDAQ:PLUG) and SolarEdge (NASDAQ:SEDG).
They also love to shop online. About 75% say they prefer to do most shopping online, so it does indeed look like Amazon (NASDAQ:AMZN), Shopify (NYSE:SHOP), Chewy (NYSE:CHWY), Wayfair (NYSE:W), and Etsy (NASDAQ:ETSY) are ready to capture even more share of the global retail sales pie.
An important extension of that: Gen Z is obsessed with status because they grew up in an “always on” social media world where everything – and everyone – is constantly advertised. This bodes well for online fashion luxury stocks like Farfetch (NYSE:FTCH) and The RealReal (NASDAQ:REAL).
Some other important and defining qualities of Gen Z consumers include:
- They hate cash. Only 18% of them prefer cash payments, while 80% use a mobile digital payment platform like Venmo at least once per month. That’s great news for Venmo-owner PayPal (NASDAQ:PYPL) and Square (NYSE:SQ), who owns Venmo competitor CashApp.
- They love esports. Gen Zers – who are half as likely as millennials to watch live sports regularly and twice as likely to never watch – enjoy watching esports more than the MLB, NASCAR, and the NHL. Esports content providers like Activision (NASDAQ:ATVI), Take-Two (NASDAQ:TTWO), and Electronic Arts (NASDAQ:EA) are well positioned to capitalize on this shift from sports to esports.
- Travel is a huge priority. Half of Gen Zers travel one to two times per year, mostly because social media serves as a forever-picture-perfect-reminder of the beauties of the world. Expedia (NASDAQ:EXPE) and Booking (NASDAQ:BKNG) are clear winners here.
- Driving is not a huge priority. Half of U.S. teens don’t have a driver’s license. That’s bullish for ride-sharing services like Uber (NYSE;UBER) and Lyft (NASDAQ:LYFT).
- They prefer virtual interactions. 40% prefer to interact virtually. That’s bullish for virtualization stocks like Zoom (NASDAQ:ZM), Match (NASDAQ:MTCH), Snap (NYSE:SNAP), and Pinterest (NYSE:PINS).
I could go on and on…
But you get the point. Gen Zers are much different than their grandparents and parents. They are ready to broadly and robustly adopt many of the futuristic technologies which, to-date, have seen niche uptake.
To that end, the Gen Z revolution will kick many of the hypergrowth trends we follow closely into overdrive.
And that’s why we’ve never been more bullish on hypergrowth stocks than we are today.
The time to invest in the future – and in the children – is now.
Well… not right now… maybe in a week. For now, enjoy some time with the family, because we all deserve it after the roller coaster year of 2020.
Wishing you a Happy Holidays from all of us at InvestorPlace.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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