Buying stocks can benefit investors of all ages. And the younger you are, the more time you have available for these investments. But today’s market filled with biotech and artificial intelligence companies can seem intimidating to those a little later on their investment journey. It’s understandable if a lot of this sounds like science fiction to someone born between 1946 and 1965 – a baby boomer.
That’s why we asked three writers at Fool.com what stocks they think this generation should be targeting. The aim was to select companies that serve customers that are familiar to an older generation. They offered Aushnet Holdings (NYSE: GOLF), Walt Disney (NYSE: DIS), and Palantir technologies (NYSE: PLTR). Here’s why.
A good walk spoiled
Jason Hawthorne (Acushnet Holdings): Golf has been labeled as “a spoiled good walk”. It’s unclear who said it first. But young people will likely agree. Data from 2005 showed that children dropped out of sports. It is estimated that millennials played 36% less golf by 2014 than at their peak. It has resulted in almost everyone viewing golf as a sport for the elderly.
But the pandemic – and the need to find outdoor recreational activities – brought a slight resurgence to the game. In fact, the 24.8 million golfers in 2020 were a 2% increase over 2019. That may not seem like much. But it was the biggest increase in nearly 20 years. Acushnet Holdings and its well-known golf brands are reaping the rewards.
Anyone who has ever sunk a long putt or watched it on TV has heard of Titleist, FootJoy, and Pinnacle. These are some of the names in Acushnet’s portfolio of golf apparel and equipment. In particular, the company designs, manufactures, and sells everything from golf shoes, balls, and gloves to wedges, putters, and traditional clothing.
Before the pandemic, annual sales had increased slowly since going public in 2016. The pandemic has changed that. At least for now. Revenue of $ 1.2 billion for the first half of 2021 was 35% higher than the same period in 2019. Net income was 126% higher.
Another thing that investors who are about to retire might enjoy is the dividend. The company pays $ 0.165 per quarter for a 1.3% return. The payout began a year after the IPO and has increased every year since then.
It may not be a household name unless your TV is usually tuned to the golf channel. But Acushnet Holdings is experiencing a golf renaissance to growth, profits, and rising dividends. This could be exactly what investors who are frustrated with current markets are looking for.
People just need a little old fashioned maybe
Jon Quast (Walt Disney): In the first Avengers movie, secret agent Phil Coulson said to Captain America, “People may just need a little old-fashioned.” And I think it is applicable to investors now. With the incessant buzz of meme stocks, cryptocurrencies, and non-fungible tokens, it’s easy to get overwhelmed. But I believe investors of all ages can do well if they stick with an old-fashioned investment like The Walt Disney Company.
A Disney investment thesis starts with the incredible persistence of its intellectual property. For example, Mickey Mouse was created almost 100 years ago and yet the character entertains children all over the world. The company has just opened a Star Wars-themed hotel that runs a family of four for a weekend break at a staggering $ 6,000, though the first film was released back in 1977. In the 1970s, Marvel’s Shang-Chi emerged, a property that Disney is currently using to dominate the box office.
This vast library of valuable intellectual property enables Disney to benefit in many ways. In 2019 (pre-pandemic), 38% of the company’s revenue came from the theme park segment, 36% from its media networks, and 16% from movies. Only a small percentage came from the direct-to-consumer segment.
In the first three quarters of fiscal 2021, Disney’s theme park segment accounted for just 23% of total revenue – a significant decrease from 2019 normal Still not recovered in the wake of the COVID-19 pandemic. But the company has evened that battle by pulling what is perhaps the greatest lever of choice ever with its Disney + DTC subscription service. In less than two years from launch, Disney + already has 116 million subscribers.
Disney was a dividend stock before the pandemic. It suspended payouts last year like many other companies. However, dividends typically apply to mature companies with poor growth prospects. Perhaps this is what Disney described before the pandemic. But now this sprightly company is hesitant to bring back the dividend because of such a big opportunity ahead of them with Disney +. The excess cash flow will initially serve to increase this growing source of income. In other words, Disney + is making Disney operate like a young growth company again.
As for Disney’s other revenue streams, it is true that they are still being held back by the ongoing pandemic. And we don’t know when exactly the pandemic will end. But I am confident it will be. And if that’s the case, I expect Disney’s theme park and movie segments to thrive like they did in days gone by.
In short, Disney is a safe stock, a growth stock, and one that will have great tailwinds once it can return to normal. It may seem cumbersome to some, but it might just be the kind of old-fashioned company your portfolio needs.
Get a piece of the big data revolution
Keith Noonan (Palantir): Because Palantir is valued at 37 times this year’s expected sales, it might not immediately stand out as an entry-level stock for investors who are retired or are about to retire. On the other hand, I also think the baby boomers have a lot to gain by keeping an eye on rewarding growth games. Just like there are good arguments for owning a top-notch, growth-driven company like Amazon, I think investors of all ages will be rewarded for building positions in Palantir.
First off, Palantir may not be as risky as its forward-looking valuation implies. The company is by far the leader in its industry in its data analytics services industry, and has already signed major contracts with government agencies like the FBI, CIA, National Security Agency, the Army, and Centers for Disease Control Prevention, among others.
The upside with this is that sales to government organizations are usually fairly reliable, and there’s a good chance that public sector demand for the company’s artificial intelligence-based services will grow strongly over the next decade and beyond will. Whether it’s safety, health initiatives, or transportation, the ability to collect and analyze valuable data has never been more critical to mission success.
Even better, Palantir’s big data analytics services are enjoying rapidly growing adoption by private sector customers. In the most recent quarter, the company managed to increase its total revenue 49% year over year, and sales to business customers rose a whopping 90% over the period. With impressive dynamism in both the public and private sectors, management expects the company to grow sales by more than 30% annually through 2025.
Palantir is already one of the most popular stocks among traders on the Robinhood Markets Trading platform suggesting that it is quite successful in the Millennial and Gen Z age demographics. But the company also has a lot to offer the baby boomers. This is a meme stock that has the potential to bridge the generation gap.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.