October 9, 2020

Millennials Make Tons Of Money On Their New Favorite Stock

[Investor’s Business Daily, AP]

Move over Apple. Millennials prefer another stock — and it’s not even in the S&P 500 yet.

Consumer discretionary Tesla (TSLA) dethroned information technology giant Apple (AAPL) as the most popular stock held by millennials. Apple got bounced from the top spot after holding it for four-straight quarters, says a just-released quarterly analysis from Apex Clearing, a custody and stock clearing firm. Apex studies more than 1.5 million investment accounts held by people aged 31 years old, on average.

S&P 500: Do Millennials’ Stocks Go Down?

And while many might criticize these young investors, they’re laughing all the way to the bank. Tesla shares are up 409% this year. That blows away the “buy-and-hold” crowd who are up just 6.7% with the S&P 500. Tesla even makes Apple’s 56.6% gain this year look so-so. And millennials are the only major generation to make Tesla their top holding. It’s No. 2 for Generation Z and Gen X and No. 3 for baby boomers.

10/9/2020 (Market Close)

With such massive wins like Tesla, it’s easy to see why millennials are pouring into the stock market. “It is incredible that since the beginning of the year, in the face of persistent pandemic-related volatility, the number of millennial investor accounts across our client platforms has doubled,” said Bill Capuzzi, CEO of Apex Clearing.

Tesla may be millennials stocks’ biggest winner. But overall, the generation had an impressive run this year with stocks, including many in the S&P 500.

Millennials are making money on all but two of their top 10 holdings. And not by just a little. The average year-to-date gain on millennials’ top 10 holdings is more than 80%. But to put that into perspective: That’s even better than S&P 500 component‘s (AMZN) 73% rise this year. Very few stocks pull that off.

Additionally, millennials owned big stakes in some big winners in addition to Tesla. Six of millennial stocks’ top 10 holdings are up 50% or more this year and three are up more than 70%.

Millennials Make Lots Of Moves

Millennial investors are not afraid to move money to take advantage of opportunities.

Nearly a third of millennials’ top 100 holdings are new this year. Meanwhile, they tossed out more than 30 of their top 100 holdings coming into the year.

Much of the millennial turnover is all about trying to capitalize on the disruptions this year from the Covid-19 pandemic. Delta Air Lines (DAL) is millennials’ 17th most popular holding. It wasn’t even in the top 100 last year. S&P 500’s Delta’s been a bad bet in 2020, down 44%.

But they also added Zoom Video (ZM) to their top 100 holdings this year (it’s No. 21). And that video-streaming streaming stock is up 603% this year. Similarly, millennials put online firms DocuSign (DOCU) and Teladoc Health (TDOC) in their top 100. They didn’t own much of either stock before. Docusign, their No. 51 holding now, is up more than 190% this year. And Teladoc, now No. 69, is up more than 160%.

The technology sector, overall, is millennials’ favorite. Four of their top 10 holdings are in the technology sector. And another three are in the tech-tinged communications services industry.

Betting on Travel’s Comeback

Millennials are gearing up for the world to travel again. They are big holders of most of the airlines. Not just Delta, but also American Airlines (AAL). Even as American’s shares dropped 54% this year, it rose to millennials’ No. 22 top holding, up from No. 76 last year.

Boeing (BA), another S&P 500 company, is a No. 10 holding even though it’s one of Millennials’ big bets that hasn’t paid off. Shares are down 48% this year. Even so, the aerospace company’s position in millennials’ portfolios is up from No. 17 in 2019 and No. 24 in 2018.

And they’re also loading up on cruise ship operators. Carnival (CCL) is now millennials’ No. 23 holding, despite collapsing nearly 70% in value this year. It wasn’t in the top 10 in 2019. Hopefully, they know what to look for when buying Carnival stock.

Carnival’s Strategic Game Plan

The company plans to speed up disposal of ships in 2020 that it had slated for sale in coming years.

At the time of its June 18 earnings report, Carnival said it already had preliminary agreements to sell six ships within 90 days.

Some ships would be scrapped.

Still, consumers remain interested in cruises, despite Covid-19 concerns and the pause in cruises. Even though Carnival has spent much less to market cruises, the company said in June that it “is seeing growing demand from new bookings for 2021.”

For the six weeks ended May 31, roughly 67% of 2021 bookings were new. The remainder were from guests applying credits from canceled cruises.

Top Ten Holdings Of Millennial Investors

RankCompanySymbolStock YTD % Chg.SectorComposite Rating
1Tesla(TSLA)409.1%Consumer Discretionary99
2Apple(AAPL)56.6%Information Technology88 Discretionary99
4Microsoft(MSFT)33.5%Information Technology93
5Facebook(FB)28.5%Communication Services96
6Nvidia(NVDA)135.3%Information Technology99
7Walt Disney(DIS)-14.9%Communication Services38
8Advanced Micro Devices(AMD)88.6%Information Technology99
9Netflix(NFLX)64.4%Communication Services99
Source: IBD, S&P Global Market Intelligence, Apex Clearing. Holdings through Sept. 30, performance through Oct. 8

Millennials certainly have lots of faith in Tesla CEO Elon Musk. And so far, it and other big bets, some outside the S&P 500, are mostly working for them.


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