Cowen breaks down 8 key investing themes and 12 stocks to buy as the net worth of millennials quadruples over the next decade

Information about Facebook stock shares is displayed on a monitor as traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) at the closing bell,

Summary List Placement

The habits and behaviors of millennials are fascinating to the older generations. And their share of total US net worth is expected to quadruple by 2030, according to John Kernan, an equity analyst at investment bank Cowen, who says investors that understand this generation of consumers will be best positioned to capitalize on the great transfer of wealth that will eventually take place. 

Cowen recently conducted its third annual survey into the behaviors of millennials – those born roughly between 1980 and 2000 – and Generation Z – those born between 1996 and 2010 – for insight into these groups’ behaviours. The survey interviewed 1,200 US adults from the ages of 18 to 34, benchmarked against 1,500 US adults from the ages of 35 to 55.

“As these cohorts, who have grown up in the digital age, grow older and experience rising income, along with potential for substantial wealth inheritance estimated at $30 trillion over several decades, consumption patterns of these consumers could lead to profound shifts in the retail and payment industries, rendering them a critical demographic for investor focus across consumer and tech verticals,” Kernan said.


According to an Accenture report, the peak of wealth transfer will occur between 2031 and 2045, with around 10% of total wealth of the US changing hands every five years. As millennials and Gen Z see their wealth grow, their decisions around shopping habits, consumption behavior and savings pattens will likely have an impact on the consumer, e-commerce, payments and restaurant industries.

Cowen’s survey identified eight key themes that will have an effect on growth and risk across these sectors and the bank’s team of equity analysts identified 12 stocks that will be well placed to benefit from that broader shift in consumer behaviors.

“Gen Z and Millennial consumers should grow to 70% of the global population by 2028 vs. 60% today, facing different ethnic compositions and wealth distributions than prior generations,” Kernan said.

Many of the stocks listed are growth stocks, aligning with current environment where investors are preferring  growth stocks over value stocks.

“The ‘growth’ vs. ‘value’ continues to skew stock performance in favor of TAM and digital growth narratives in Consumer,” Kernan said.

Eight Key Themes

These are the eight key themes on consumer behavior that came out of the annual survey.

Sustainability & Social Impact

Sustainability and social impact are playing an important role in young consumers’ decisions — 74% of respondents said sustainability or social impact was either “very important” or “somewhat important”.

“Gen Z and millennials view a brand’s social impact and sustainability [initiatives] as more important than older demographics which, on average, registered at 53% within the survey,” Kernan said “Initiatives to promote sustainability will benefit those with scale in the supply chain to offset costs.”

Resale Capabilities

Growth in purchasing on leading resale platforms grew 36% year-over-year, according to the report. Analysts identified that consumers attitudes toward second hand items and secondary markets had turned favorable. The themes underpinning this change were digital communities, data analytics, product scarcity and network effects.

“The network effects of each …read more

Source:: Business Insider


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