I am all about making money in next-generation mega-trends, or NexGen as I call my investing system. That often means breakthrough innovations that will lead the way into the future or advancements on what already exists that change the game. In one instance, the next generation is actually a generation.
It doesn’t matter what you call them – millennials, generation Y, echo boomers or anything else – every investor needs to know about this increasingly important demographic wave. They are now the largest group of individuals in American history, surpassing the vaunted baby boomers, and they are the next generation of pretty much everything.
Because this group is so large – more than 80 million people, or about 30% of the U.S. population – they have become the main focus of advertisers and companies that sell everything from cars to clothes. We as investors also want to profit from the largest demographic in the history of Western civilization, and to do that, we must get into their mindset.
I’m too old to be a millennial (roughly those born between 1980 and 2000), but I have found that I often think the way they do. I’ve always loved technology, which is the basis of a lot of millennial-driven trends, and I am all about convenience. I’m also surrounded by millennials in my businesses and in my personal life. And as an analyst, I have also done significant research on this budding generation.
The opportunities associated with this demographic force are and will be enormous. I could probably write a whole book on the subject – and, in fact, I am making it a chapter in the book I am writing on NexGen investing. Let me show you what I mean by sharing three observations about millennials, the trends they are driving and the companies in their path.
All about Experience
For a long time, Americans were infatuated with “stuff.” The baby boomers are now trying to get rid of everything they’ve accumulated, but the millennials may not have to do that in the future as this generation is not fixated on collecting stuff. They are more interested in experiencing life.
Given the choice between a new big-screen TV or a two-week trip backpacking through Europe, millennials would choose the trip, even when it means sleeping in a hostel with eight snoring Germans. Most baby boomers would view that as too much trouble and prefer to get comfy in their recliner watching their new TV.
With this emphasis on experiences, millennials are returning to the tried-and-true camping trip. According to KOA, one of the largest private campground companies in the country, 38% of its campers are millennials. That’s a sizable number in and of itself, but remember that they make up only about 30% of the overall population. And here’s the millennial twist: KOA found that younger campers value Wi-Fi access nearly as much as toilet paper. (No comment.) They want to keep the world up to date in real time on Instagram, Facebook, Snapchat and other apps millennials love.
The investment opportunity here leads us right to recreational vehicles (RVs). This year is expected to be the best ever for RV sales. Some of it is retired baby boomers driving around the country, but a large part of the growth is millennials.
I recently recommended an RV stock to my NexGen Investor subscribers. It has all the characteristics I look for – high growth potential in a booming sector, a leader in its industry and a great chart to back it up. (Click here to learn more about how you can try NexGen Investor and get all of the details on this company.)
Make that Delivery
Last year marked a major turning point as it was the first time ever that Americans spent more on dining out than on buying groceries. Some of that is because families are busy with afterschool activities, but let’s face it, the ability to order food and have it delivered while you’re sitting on your couch is pretty nice.
When I was living in New York City, I could go days without food in the refrigerator and still eat healthy and hearty meals. There were no less than 10 restaurants within one block of my apartment, but it was still easier to grab my phone and have the food delivered to my door within 45 minutes.
There are a growing number of options available, and one of my favorites is GrubHub (GRUB), which has grown to be worth nearly $6 billion. Through GrubHub and related Seamless apps and websites, the company connects diners with 75,000 restaurants in over 1,300 cities. And that’s just scratching the surface of what’s out there. GRUB has doubled in less than eight months, and I’m watching it for the right opportunity to make more money on this developing trend.
Somewhere along the way, you may have heard that millennials are against marriage and having children. That’s not true. They are just waiting longer, which continues a trend that has been going on the last few generations. And as they wait, they are fine living in their parents’ homes.
You may also have heard that millennials don’t work hard, which is not accurate either. In 1980, surveys showed that 75% of people in their 20s had worked in the past week. Today, that number is up to 77%. The largest demographic in the country is working hard, and they will begin to make the kind of money that will lead them out of the basement and into their own homes with their own families. This means another baby boom and a slew of new parents spending money on their children.
You can see how this will open up a lot of potential investments, even in something as simple as clothing. I already have my eye on one retailer that is in great position to benefit. Real estate is another tremendous opportunity, we do have a stock in NexGen Investor that is changing the way people find and buy homes. I love it as a way to make money on millennials purchasing more houses in the years ahead.
There are so many exciting ways to build your own wealth from what will be the greatest transfer of wealth in U.S. history – from baby boomers to their children. I’ve given you a few ideas to get you started today, and there will be much more to come as this investing theme is only just beginning.