Time is on this generation’s side.
Millennials are in a prime position to accumulate wealth. With the right stocks, a millennial portfolio has decades to grow. “The best investments are in something that is going to be around for a while, a company that’s creating new things that people really need,” says Greg Oray, president and investment advisor representative at Oray King Wealth Advisors. Holding a solid investment for many years is even more important now, given the pricey stock market, adds Dick Pfister, chief executive officer and founder of AlphaCore Capital. The companies named here have staying power in health, entertainment and especially technology, a fitting sector for history’s most tech-savvy generation.
Nike Inc. (ticker: NKE)
With brand loyalty spanning multiple generations, Nike remains at the top of its game. Top athletes, like Cleveland Cavaliers star LeBron James, have multiple-year contracts to promote Nike’s brand. The company successfully leverages social media, such as Snap Inc.’s (SNAP) Snapchat, to promote and sell products, like Nike’s new Air Jordan sneakers. Nike also is the first choice for athletic apparel buyers by a margin of 30 percent, according to surveys, Pfister says. At 28 times earnings, Nike is at the high end of its price-earnings ratio, so anyone buying shares at the current $67 price should hold the stock for many years to ride out any short-term price swings.
Amazon.com (AMZN)
Amazon’s P/E ratio may be at a nose-bleeding 232 times earnings, but the stock is a long-term holding, Pfister says. “They have so much money to spend, and they’re causing such a disruption in every vertical they go into,” he says. Buying Whole Foods last year gave Amazon access to more distribution centers to quickly deliver products, including groceries, tapping into the millennial desire for speed and convenience, he says. The online seller is also looking into drone delivery service, which could attract younger shoppers, even as a novelty. The one downside risk Pfister sees is if another online retail giant, China’s Alibaba Group Holding Ltd. (BABA), comes stateside.
Walt Disney Co. (DIS)
The storyteller of your childhood wants to keep readers and viewers hooked into adulthood, Pfister says. He likes Disney better than a similar content provider, Netflix (NFLX), for several reasons. Disney owns two companies with a ready-made viewing base: the Marvel and LucasFilm franchises; the latter gives Disney the rights to the Star Wars films. Disney also has a growing dividend and strong free cash flow, unlike Netflix, which has negative cash flow and owns no strong franchises. And compared to other large-cap stocks, Disney is cheap, trading at 14 times earnings, far less than the average P/E ratio of 24 for the Standard & Poor’s 500 index, he says.
Micron Technology Inc. (MU)
Micron Technology is an established name, and Oray considers it a leading memory chipmaker. He likes the company because it competes in both sides of the chip-making industry: producing both the dynamic random access memory chips used in PCs, servers and data centers, and the flash memory chips found in USB drives and mobile devices. Micron is also involved in cloud storage. The stock fell recently after UBS downgraded the company, but 18 of 23 analysts who cover Micron rate it a strong buy, according to Nasdaq. With a price-earnings ratio of 6.1, Micron is a good value compared to the Nasdaq 100’s average P/E ratio of 25.
Nvidia Corp. (NVDA)
Oray and Jeremie Capron, research director at advisory company ROBO Global, consider Nvidia a leader in artificial intelligence technology. Nvidia makes specialized electric circuitry like the graphic processing units (GPUs) used in video games and in AI, Capron says. Although an emerging field, AI has grown a lot. So has demand for Nvidia’s AI chips, which he says has grown from 1 percent two years ago to 3 percent now. “It’s very strong growth with a long runway for increased penetration in AI,” says Capron. One of the biggest reasons the stock has done so well lately was the huge need for GPUs to mine bitcoin and other cryptocurrencies, Oray says.
Cognex Corp. (CGNX)
Another emerging technology is machine vision, which gives robots and automated systems the ability to see. Cognex is a leading U.S. creator of this technology, Capron says. A robot’s high speed and accuracy today is based on repetitive motion. Without sight, robots can’t adapt to most changes in manufacturing, and machine vision dramatically expands the scope of applications for using robots outside of factories. Robots are starting to be used in areas like farming, the food and beverage industry and health care, he says. Still in its early stages, the technology is not well known to the general public. Although some Asian companies also are involved in machine vision, they’re difficult for Americans to invest in.
Intuitive Surgical Inc. (ISRG)
Robots are beginning to appear in operating rooms, and Intuitive Surgical dominates this market, Capron says. The company pioneered robotic products used in surgery to improve physician performance and post-surgery outcomes, he says. Its da Vinci Surgical System is in more than 4,000 hospitals worldwide, and all the big U.S. hospitals use Intuitive’s robots. Procedures with robotic assistance more than doubled between 2012 and 2017, with Intuitive Surgical expanding rapidly the past few years. At the end of 2017, the company had $3.8 billion in cash, cash equivalents and investments. As the need for health care rises across all demographics, ISRG should have a healthy future.
Zebra Technologies Corp. (ZBRA)
Zebra Technologies makes the technology that tracks and traces products in the supply chain, including barcode scanners and radio frequency ID tags. Capron says Zebra also makes the mobile computers that companies like UPS (UPS) and FedEx (FDX) use, and creates systems for trucking companies to load vehicles as efficiently as possible. With online shopping growing and millennials favoring on-demand delivery, companies will need this technology to trace packages and to create a more transparent supply chain. Zebra’s radio frequency ID tags show where something in that chain has been from beginning to end.
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8 Great Stocks for Millennials to Buy originally appeared on usnews.com
