Gaming to Pizza: Five Millennial Favorites

06/09/2017 2:50 am EST

Focus: STRATEGIES

Chris Preston

Investment Analyst, Cabot Wealth Network

What are Millennial stocks? Companies that cater to Millennials’ tendencies toward instant gratification — fast service, fast shopping, fast news delivery, etc. The term Millennial stocks will no doubt evolve in the coming years along with Millennials themselves, explains Chris Preston, editor of Wall Street’s Best Daily.

For now, there are a number of publicly traded companies that qualify as Millennial stocks. As Millennials age, earn higher-paying jobs and thus have more money to spend, the following stocks are flourishing — and should continue to do so as America’s largest generation grows up. Here are five Millennial stocks that stand out:

Millennial Stock #1: Activision Blizzard (ATVI)

A favorite of our value investing expert Roy Ward back in November, shares of this video-game developer have grown considerably since.

ATVI stock is up 64% year to date, spurred by a third straight quarter of double-digit sales and earnings growth. Activision’s success is due to the extreme popularity of its myriad video games.

Activision’s portfolio of top game franchises includes World of Warcraft, Call of Duty, Skylanders, StarCraft and Diablo. The company also has a long-term exclusive license for certain Marvel Enterprises comic book characters, including Spider-Man and X-Men.

Activision acquired King Digital in February 2016. King is best known for its super popular Candy Crush games and had nearly 500 million monthly active users for its mobile-focused games. Activision now has global scale, multiple strong franchises, and growing digital offerings.

Though sales and earnings are expected to take a step backward in the current quarter, the company’s long-term growth trajectory is decidedly up, and the chart looks fantastic.

chart

Millennial Stock #2: Take-Two Interactive Software (TTWO)

In case you didn’t know by now, Millennials love video games. So it makes sense that shares of two of the largest video-game publishers in the world have risen almost in tandem this year.

Take-Two is the maker of the popular Rockstar and 2K Games, and TTWO stock is up 59% year to date and has more than doubled in the last 12 months.

Though its sales are less than a quarter of Activision Blizzard’s, the company is growing much faster: it posted 53% revenue growth and 73% earnings per share growth in the first quarter.

Though analysts expect the company’s sales and profits to take modest steps backwards this year, a major bounce-back in 2018 is forecast. And judging by the chart, it’s clear the modest estimates in the coming quarters aren’t scaring investors away.

chart 1

Millennial Stock #3: Domino’s Pizza (DPZ)

Domino’s wasn’t exactly a no-name before Millennials started ordering pizzas by the truckload from one of the nation’s fastest delivery chains.

But Millennials have undoubtedly had a profound impact on Domino’s business: the company’s sales have improved for four straight years, going from 1.6% in 2012 to 11.6% last year. First-quarter sales expanded even further, to 15.8%. Hence, a chart that looks like this:

chart 2

Millennial Stock #4: National Beverage Company (FIZZ)

This one’s a bit more obscure — I had never heard of National Beverage or most of its products until recently, and I’m 36 (technically two years above Millennial-aged, according to most definitions). It’s a maker of the flavored soft drinks and juices many Millennials crave.

National Beverage’s popular brands include Rip It energy drinks, Mega Sport sports drinks, and Everfresh fruit juices. The company’s sales have grown in nine of the last 10 years, with profit growth reaching a six-year high in 2016.

And the stock is on a rampage: FIZZ is up a whopping 81% already in 2017, and has doubled from $46 in mid-January to $92 now. The stock hasn’t traded below its 50-day moving average in four months.

chart 3

Millennial Stock #5: Facebook (FB)

Millennials aren’t solely responsible for the Social Network’s ascension. But they are Facebook’s biggest client base, as 30% of Facebook users are ages 25 to 34, the highest percentage by a wide margin. The percentage is even higher than that outside the U.S., where the same demographic accounts for just 13% of Facebook’s user base.

Given that international expansion is what’s fueling the company’s user growth, that number should only rise in the coming years. So, while FB is a great growth stock (+31% YTD) for all ages, at its heart it is truly a Millennial stock.

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