In our last visit, I talked about the immense profit potential that the budding millennial demographic holds for savvy investors as we witness the greatest transfer of wealth in U.S. history (if you missed it, catch up here!). This is one of my favorite megatrends driving Wall Street right now, and within that I’ve identified four hot spots – I call them secondary trends – that are leading the charge.
Social media is powerful among millennials. Today I want to show you how it goes beyond tweeting or posting to Facebook.
The reason millennials are always on social media is that 86% of them own a smartphone, so they’re always connected and know how to take full advantage of having the world at their fingertips. They also use their smartphone to bring the lifestyle they want right to their door.
As a result, the service industry is ready to take off, opening up even more areas we can profit from. Remember, millennial spending is expected to reach $1.4 trillion annually in the United States by 2020, representing 30% of total retail sales. You better believe a good chunk of that is going toward making life more convenient!
Take food, for example. It’s as old as the human race itself, but now we have a next-generation way to make money. Millennials will eat out 177 times in a year, which is 20% more than the 146 times for other demographics, but that doesn’t always mean it will be in a restaurant. GrubHub (GRUB) provides an online and mobile platform for pick-up and delivery orders, connecting diners to over 40,000 local restaurants in 1,000 cities.
The ease of ordering online or through an app, as well as taking advantage of deals on otherwise pricier hot spots, makes this company a millennial favorite as well as a personal favorite – I live off GrubHub whenever I stay in New York! Good thing they deliver to people older than millennials, too. I’m can’t say I’m responsible for all of the company’s 36% growth in sales last year (the stock was up 48%), but I did my share.
Even fitness has a mobile component for millennials. Gone are the days of sticking with one gym membership or just going out for a run. Millennials like options, and MINDBODY (MB) provides them. The company operates a cloud-based software and payments platform for the wellness industry. Simply download the app to find and book fitness classes nearby, rate and review different studios, find deals on new exercise crazes, manage your workout schedule and track progress. It’s also great for finding fitness options while traveling – this is another app I like to take advantage of on the road.
This young company is an intriguing investment option as it should turn profitable for the first time next year, and the period leading up to that can often give you some of your best buying opportunities. Current expectations are for a loss of $0.11 per share in the current year followed by profits of $0.17 a share next year, and I see them earning up to $0.62 a share by 2019.
Millennials, let me ask you a question: When was the last time you stopped at an ATM to grab some cash to pay a friend back for lunch? Or wrote a check to cover your half of a vacation rental? The rest of us know what I’m talking about, but chances are good you millenials are shaking your heads at me right now. PayPal (PYPL) has stepped in to make online payments the preferred method of person-to-person transactions, and its new ownership of Venmo, a popular payment app, is poised to be a big win for the company.
If you want the world at your fingertips, you need to gain access to the mobile network, and millennials in particular must choose a wireless carrier to provide the high levels of data needed. T-Mobile (TMUS) is a leader in unlimited data plans and has been a top choice of millennials for years. It has extra appeal right now as a takeover target since larger players are looking to gain access to the growing population. That’s just another reason why the stock has gained more than 60% in the last 12 months.
With all that we’ve talked about so far this week, I hope you are beginning to see the many ways to profit from the millennial boom that is still in its early stages. And remember, because it’s still early, smart investors can get in ahead of Wall Street, which is how to make the big money. We have much more to talk about, so stay tuned for my next article – and thanks for reading!