I just wrote an article on shares that could profit from rich baby boomers, so why not look at shares that could profit from millennials lavishing their money on various items?
I think it’s important to follow spending habits because millennials will soon be, if not already, the largest demographic in the workforce.
Millennials are often derided as not saving enough money for a house deposit. So, assuming that is true, here are some shares that seem to be benefiting from the spendthrift millennial generation:
Costa Group Holdings Ltd (ASX: CGC)
Costa is one of Australia’s largest food-producing companies, when it listed the company focused on growing tomatoes, berries, citrus fruit and mushrooms.
Millennials are supposedly big lovers of avocado on toast and Costa has tried to steer its business towards this growth sector by acquiring a number of avocado farms.
Industry experts believe that avocadoes are experiencing decent price growth, which should lead to higher profits for Costa over time. A lot of other foods are experiencing price deflation in the supermarket.
It’s currently trading at 24x FY19’s estimated earnings.
Afterpay Touch Group Ltd (ASX: APT)
Afterpay is the leader of the buy-now, take-home-now, pay-later-in-instalments service in Australia. The company boasts of ‘getting millennials’, which certainly seems true as Afterpay has won many large retail customers and is experiencing excellent year-on-year growth.
It remains to be seen what happens to Afterpay in a downturn considering it relies on its customers to continue paying their outstanding amounts.
Afterpay is looking to expand into the USA, which has over 10x the population of Australia, meaning it’s a big opportunity.
The company is trading at 59x FY19’s estimated earnings.
BETANASDAQ ETF UNITS (ASX: NDQ)
Millennials love using their Android or Apple smartphone to scroll their Facebook feed or watch Netflix.
This exchange-traded fund offers investors exposure to all of the above businesses I mentioned, as well as others like Amazon, Microsoft, Intel, Cisco and Nvidia.
When you consider how the world is becoming increasingly technological it’s hard to think of shares that won’t benefit more than the world’s biggest technology companies. If those top companies don’t invent the next big thing, they can just acquire the competitor before it gets too big. Facebook acquired Instagram and Whatsapp to diversify its offering to consumers.
Afterpay is doing very well, but I don’t think it’s a sleep-well-at-night type of stock, so I wouldn’t want it in my portfolio. Both Costa and the ETF could beat the ASX Index over the coming years, so I’d much rather have those two in my portfolio at the current prices.
Other share ideas to beat the ASX index over the coming years are these top growth shares.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and COSTA GRP FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.