3 Smart Stocks Millennials Should Consider Buying
Who could blame millennials for not wanting to touch the stock market with a 10-foot pole? They grew up in an age of turbulence. In a span of only a decade, the American stock market went down in flames not once, but twice. Even worse, aftershocks of the latest financial crisis are still being felt throughout the economy.
The Great Recession left a lasting impression on millennials’ investing psychology. Instead of trying to grow their wealth, many seem content with simply maintaining what they have managed to accumulate. A recent report form UBS Wealth Management finds that cash represents 52% of the average millennial’s portfolio, compared to 23% among other investors. Millennials believe saving is the best option for their money, and only 12% say they would invest found money in the stock market.
While cash can be useful in certain situations, making it the foundation of a portfolio is a dangerous strategy. When it comes to the stock market, low-cost index funds are typically the best strategy for investors, but sometimes a more interesting option is needed to pique interest. Let’s take a look at three stocks that may be relatable enough to garner some attention from millennials.
1. Apple (NASDAQ:AAPL)
Millennials are keeping their heads down for a reason. The digital age has more people staring at screens than ever before, which creates opportunities for investors. Profits, strong balance sheets, dividends, share repurchases: Millennials can learn about all of them with Apple. The tech giant reported net income of $18 billion in the first quarter, the largest earnings gain by any company in history. In fact, Apple has now set record first-quarter earnings for four consecutive years.
This impressive track record allows Apple to accumulate and distribute an unprecedented amount of cash. Taking the total of Apple’s cash and cash equivalents, short-term marketable securities, and long-term marketable securities, the company’s cash position grew to $178 billion at the end of 2014. By the end of 2015, Apple will have returned more than $130 billion to shareholders through dividends and share buybacks in less than four years. In April, Apple will likely announce an expansion of its capital return program and give even more money back to investors.
2. Disney (NYSE:DIS)
Founded in 1923, Disney shows millennials that you really can teach an old dog new tricks. While it may best be known for its classics like Cinderella and The Lion King, Disney continues to appeal to all ages. In 2013, Disney swept the world with Frozen, now the fifth highest-grossing film of all time. Recognizing the benefits of the Internet revolution, Disney also has an exclusive licensing agreement with Netflix that will start in 2016. Netflix outbid Starz for the content, which will include Disney’s four subsidiaries: Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, and Disneynature.
Disney has a variety of segments that are performing well for shareholders. In the most recent quarter, revenue for its media networks jumped 11% year-over-year to $5.86 billion. This includes household names such as ESPN, ABC Family, and worldwide Disney Channels. During the same period, revenue for parks and consumer products increased 9% and 22%, respectively. In February, Disney displayed its pricing power by raising admission prices at its parks. Single-day tickets for the Magic Kingdom are now $105, their first trip above $100 in company history.
Good things typically come to an end at some point. However, considering that Disney has a coalition of superhero movies being released in coming years, along with its newly acquired Star Wars franchise, the magic for Disney shareholders is not likely to end anytime soon.
3. WhiteWave (NYSE:WWAV)
Appetites are changing across the nation. Food is no longer a commodity that merely needs to be tasty. Instead, food needs to be healthy and more appealing to those wishing to cut out unnecessary ingredients and processes. Organic food sales in the United States reached an estimated $42 billion last year and is the fastest-growing sector of the food marketplace, as 81% of American families now choose organic at least sometimes.
The organic movement is creating new stocks for millennials to believe in. WhiteWave makes and sells branded plant-based foods and beverages, coffee creamers and beverages, premium dairy products, and organic produce throughout North America and Europe. Its brands include Silk, Earthbound Farm, SO Delicious, Alpro, Horizon, International Delight, and Land O Lakes. WhiteWave even provides its own Social Responsibility Report that outlines the company’s vision and progress for changing the way the world eats for the better.
WhiteWave’s initial public offering was priced at $17 in 2012. Now, the stocks trade near $40. While a strong amount of price appreciation has already taken place, this is a company that could experience strong growth for years, if not decades. Last year, total revenue surged 35% from the prior year, accompanied by a 42% gain in net income.
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