Last year millennials became the largest generation by population size in the world. Roughly defined as 18 to 34-year-olds, the size of the millennial population finally overtook that of the baby boomers.
Although the millennial generation's spending power has been steadily increasing each year, how they choose to spend this money has differed from previous generations. This has brought challenges to many businesses, which are beginning to lose relevance.
I would say a business such as Myer Holdings Ltd (ASX: MYR) is a prime example of one which is struggling for relevance with millennials. Because of this, I don't find it too surprising to learn that its share price has fallen by around 66% in the last five years.
But it's not all doom and gloom on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO). I believe there is one share in particular that will prosper on the back of the rise of the millennial generation.
Domino's Pizza Enterprises Ltd. (ASX: DMP)
I believe Domino's is a great example of a company that has connected brilliantly with millennials. Contrary to Myer, in the last five years the shares of Domino's have risen by almost 750%.
While I wouldn't expect to see this sort of growth again in the next five years, I still believe the company will provide meaningful returns for its shareholders.
In my opinion, Domino's focus on technology has really given it an advantage over its competitors. The ease at which consumers can order pizza from online is incredibly appealing for this tech-savvy generation.
As well as this, it has been well-documented that millennials are spending a lot of their disposable income on convenience food. I feel Domino's is positioned incredibly well to benefit from this growing trend.
Also, as you may have noticed, the company has dropped the word pizza from its name. This is all part of its strategy to take on McDonalds and KFC, by offering more than just pizza. This could be a big revenue driver in the future, which could go some way to ensuring strong earnings growth for years to come.
According to CommSec, analysts are expecting earnings to grow by a massive 33% per year for the next couple of years. Although it is priced at 60x earnings, this level of growth goes some way to justifying paying a premium.
I think Domino's is a great long-term investment today. But investors should be mindful that if growth slows, the share price could tumble. The market has high expectations and a tendency to punish those which fail to deliver on them (no pun intended).
