In the investing space, we’re starting to see one word quite often. That word is millennial. The term, used to describe a population between the ages of 23 and 37, is being thrown around wildly, but why?
The answer is simple. Soon, millennials will be the richest generation in the United States. As it stands, there are about 618,000 millennial millionaires in the United States. This means that millennials already represent about 2% of the millionaires in the region. However, a coming event known as the great wealth transfer, will greatly increase the wealth of this vast population.
Over the next 25 years, it is estimated that the millennial population will inherit about $68 trillion in what is being called the great wealth transfer. Smart investors are preparing for this, making investments in millennial focused companies that have the potential to capitalize on this trend.
With that said, here is a list of multiple millennial focused companies that have the potential to see tremendous growth as the great wealth transfer takes place.
Lululemon Athletica (LULU): Banking On Millennial Fitness
For quite a while, other generations would call millennials lazy. However, when it comes to fitness, this couldn’t be further from the truth.
A recent report from CB Insights showed that about 76% of millennials exercise at least once a week. Looking at other generations shows that the trend in fitness is changing. Only about 64% of baby boomers exercise once per week and only about 70% of gen X follow along these lines.
The study also found that millennials are spending quite a bit on fitness. The generation spends $7 billion annually on gym memberships. That works out to about double what gen x and boomers spend.
While this may lead you to think that fitness club chains are strong investments, the truth of the matter is that the overhead associated with these clubs is a profit killer. In particular, if the economy doesn’t do well, fitness clubs tank, making them a rough investment concept.
Nonetheless, Lululemon makes sure that millennials are dressed to perform in the gym and look good while doing it. The company is growing quickly in the process too. With strong customer engagement and sales execution, the company recently reported exceptional Q2 results and analysts expect that gains will continue.
Summit Wireless (WISA): Bringing Ease to Home Entertainment
Perhaps one of the reasons that millennials were considered to be lazy for so long is that they like to take the path of least resistance in just about anything they do. One company, Summit Wireless Technologies (NASDAQ: WISA) is giving them the ability to do just that when it comes to home entertainment.
We’ve already seen several monumental shifts in home entertainment due to the wants of millennials. Cord cutters are giving cable companies the blues while streaming providers skyrocket. CDs and cassettes have been replaced with MP3s and streaming music.
However, when it comes to home surround sound, millennials are looking for ways to make their lives easier. That’s where WISA comes in. The company’s patented technology provides consumers with the ability to set up top-notch immersive surround systems in a matter of minutes without running wires, drilling holes, or emptying their pockets to pay a professional installer.
Big names in tech are already picking up on the trend, seeing value in simplicity. LG, Harman (a Samsung Division), Klipsch, Savant, Enclave Audio and Axiim are just a few of the names that have incorporated WiSA patented technologies into their product lines. In fact, these are just a few of the more than 60 members, including 7 television manufacturers, under the WiSA umbrella.
Importantly, consumer adoption of this technology is likely to pick up in a big way, and relatively soon. All LG NanoCell and OLED televisions will be WiSA ready moving forward. In fact, WiSA Ready will be the only logo printed on the television other than LG and HDMI.
Now is the perfect time to get involved too. This year alone, LG is expected to ship between 7 and 10 million WiSA Ready televisions. This month, WiSA certified speakers will be making their way to retail shelves to be coupled with these LG televisions. As investors awaited big news like this, the stock has given up quite a bit of value over the past six months. However, with WiSA preparing to flood the retail market, the recent declines represent an opportunity that should not be ignored.
Shake Shack (SHAK): Quality On The Go… A Recipe For Success
Fast food is something that seems to be increasing in popularity with each generation. While only about 19% of baby boomers eat on the go, about 26% of generation Xers eat on the go. For millennials, that number is far higher. About 40% of millennials frequent drive through windows.
However, millennials are also forcing a shift in how we see fast food. Not only does this vast population want their food quickly, they want high quality ingredients in their artisan burgers and other on-the-go meals.
One big trend among millennials these days is plant-based meat, or meat that is being dubbed Meat 2.0. One of the first companies to hop on this bandwagon is known as Shake Shack. The company is a fast-casual dining establishment that seems to have been created for the millennial taste.
For quite a while before plant-based meat took center stage, Shake Shack sold what they called the Shroom Burger. The burger, made of fried portobello mushroom stuffed with cheese, caught on quickly with millennials and is still a top pick.
Gearing its business to millennial taste has done well for Shake Shack too. In the second quarter, revenue grew by 31% with same-store sales rising 3.6%. Moving forward, Shake Shack intends on opening up to 60 new locations through 2019, which will likely help the company continue to grow and become a dominant force in the world of millennial-focused fast food.
Intuit (INTU): Personal Finance Apps Are The New Black
Millennials are in a position that is unique from what we see among any other generation. The cost of living is rising faster today than it has in the past decade. At the same time, millennials have the highest level of student loan debt of any previous generation.
Considering this, it comes as no surprise that consumers in the millennial generation are willing to search for ways to save money and improve their financial lifestyles. However, they’re not necessarily willing to talk to bankers.
A recent survey showed that about 71% of millennials would rather go to the dentist than listen to what banks have to tell them. With what is perceived as poor customer service and technology integration, millennials want to stay as far away from the bank as possible.
This has given way to personal finance apps in an industry known as FinTech. The grandfather of personal finance apps is Intuit, a company that many investors know well.
The company’s main products, QuickBooks and TurboTax are highly regarded among taxpayers of all types. However, the millennial focused app that has taken the industry by storm is the company’s personal finance app, Mint.
The company intends on keeping its lead in personal finance apps as well. In fact, in fiscal 2019, the company spent $1.2 billion on innovation of new products. As it continues to innovate, it will likely maintain its leadership as the finance app daddy, creating a compelling opportunity for investors in the long run.
Amazon.com (AMZN): We Can’t Leave This One Out
When talking about millennial focused opportunities in the market, there is one company that simply can’t be left out. That company is Amazon.com.
If you haven’t heard of the company yet, chances are that you live under a rock somewhere. The company is a millennial itself, founded in 1994, and speaks to the millennial lifestyle.
The online seller of EVERYTHING has left thousands of traditional brick and mortar retailers in its wake as it grew to dominate the online marketplace. The allure for millennials is simple. Instead of having to go to the story and pay higher prices due to higher overhead expenses, they can shop on their computers, saving money in the process.
While Amazon’s marketplace is impressive, the company is also becoming a dominant player in other millennial-focused areas. In fact, it owns Audible.com, IMDB and Goodreads, all of which are heavily trafficked websites, offering up digital content driven by millennial demand.
More recently, the company acquired Whole Foods Market. This is yet another millennial focused move. Millennials are interested in a healthy lifestyle, a story told by Whole Foods since its inception. By integrating their second to none distribution with the healthy options provided through the Whole Foods Market chain, Amazon could quickly become a leader in grocery.
The bottom line is that while Amazon.com is already one of the largest companies in the world, as it continues to address the demands of millennials, it will likely continue to grow; creating a compelling investment opportunity.
The bottom line here is simple. Millennial wealth is growing, and with the great wealth transfer ahead, this growth is likely to continue at breakneck speeds. As millennial wealth continues to build, companies that tailor their products and services to this population will likely see compelling growth ahead; creating opportunities for investors. In my view, LULU, WISA, SHAK, INTU and AMZN are well positioned to take advantage of the trend and produce compelling gains for investors.
Disclosure – CNA Finance was paid $10,000 for one month of research, writing, and other digital investor relations services provided to Summit Wireless Technologies.