Invest in the graying of America.
No one wants to admit it, but baby boomers — the generation whose volume and buying power created convenience inventions (such as disposable diapers) for every phase of their lives — are aging. Now that they’re getting older, the numbers are continuing to be influential — people 50 and older account for 50 percent of U.S. annual consumer expenditures, according to AARP. It seems intuitive to make investment decisions based on which services, technologies and drugs they’ll be using.
Royal Caribbean Cruises (ticker: RCL)
Baby boomers are taking distributions from their accounts to fund family-style cruises, says Jeff Vollmer, managing partner of Hyde Park Wealth Management. “No company will benefit more by that trend than Royal Caribbean, with its ability to reach the most sought-after global ports, and its blend of good food, entertainment, activities and destinations,” he says. Sharon Marchisello, author of “Live Cheaply, Be Happy, Grow Wealthy,” agrees. “Wealthy baby boomers tend to like their creature comforts, such as luxury brands and travel,” she says.
HCP (HCP)
This real estate investment trust has a 6.4 percent dividend yield and is recommended by Greg Blotnick, an equity analyst in New York. “HCP has 1,200 properties specializing in senior housing, life science and medical offices, with a diversified mix of independent and assisted living,” Blotnick says. “Shareholders have enjoyed a compound annual return of 14.9 percent since its 1985 IPO, and HCP has increased their dividend for 31 consecutive years. Health care expenditures are set to increase with the graying of America and HCP is well positioned to capture this secular growth with their unique, diversified real estate portfolio.”
Home Depot (HD)
Baby boomers entering retirement will spend their free time fixing up their homes, or spending money on second homes to renovate, and Blotnick expects HD stock to benefit. “The stock yields 2.25 percent, ahead of the S&P 500, and recently hiked its dividend by 17 percent,” he says. “Home Depot is the second-best performing stock of the last 30 years, with a cumulative return of nearly 68,000 percent or 24 percent annualized. Revenues should hit $100 billion in 2018 and the industry enjoys long-term secular tailwinds in an aging housing stock and new household formation.”
Amazon.com (AMZN)
As baby boomers age, their preference will shift towards the convenience of ordering online rather than driving to the store, Blotnick says. “(Jeff) Bezos’ e-commerce monster now captures over 50 cents of each incremental dollar spent online and 20 years of reinvestment are finally showing up in the form of margin expansion and triple-digit growth in free cash flow,” he says.
Shimano
Cycling is the new golf and many baby boomers are turning to cycling as a way to stay fit and as a social activity, says Bob Johnson, president and CEO of The American College of Financial Services in Bryn Mawr, Pennsylvania. “There are many bicycle manufacturers, but Shimano is a firm that, along with Sram, dominates the market for cycling components.” Shimano is a Japanese-based company and shares trade over the counter in the U.S. in the form of an American depositary receipt.
Celgene Corp. (CELG)
About 40 percent of men and women will be diagnosed with cancer at some point during their lifetimes, according to The National Cancer Institute, and this biopharmaceutical company has goals to develop therapies that treat cancer. Celgene “has a relatively high price-earnings ratio compared to its peers, meaning the Street anticipates higher earnings growth in the future,” says Michael Cirelli, financial advisor from SAI Financial Services.
Merck & Co. (MRK)
With high cancer rates, Merck is on the front line with immuno-oncology drugs Keytruda, and monotherapy for non-small cell lung cancer, says Mike Liss, portfolio manager of the American Century Value Fund (TWADX). “Patients first in line are healthier, treated more aggressively, and the duration of treatment is longer,” Liss says. “It also has partnered with Samsung Bioepis to enter a new business area and create biosimilars, which are cheaper copies of some of the world’s biggest biologic drugs once their patents have expired.” The company hopes to sell biosimilars of Humira, Enbrel, Remicade and Herceptin, which accumulated total sales of $40 billion in 2015.
Gilead Sciences (GILD)
This is a biopharmaceutical that develops new medicine for a variety of medical sectors. “They have high revenue growth compared to that of their peer group and a low P/E ratio, which may suggest this stock is undervalued or a bargain right now,” Cirelli says. “Morningstar has also rated this a 5-star stock, its highest rating.”
Mobileye (MBLY)
People with an eye on future growth should look to technology, like companies that make self-driving vehicles possible, says John Fowler, financial planner and wealth manager for McElhenny Sheffield Capital Management. “Automation has the potential to move into countless industries like personal travel and/or commercial shipping. That being said don’t bet on a single automotive company — rather, buy the companies that sell the so-called picks and shovels, or in this case arrays and sensors to the auto builders,” he says. Before investing in Mobileye, he says, “wait for it to pullback and add it as a speculative play with a reasonable stop-loss, just in case.”
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9 Stocks to Buy for the Aging Baby Boomer Market originally appeared on usnews.com
