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Millennials to Help Wall Street Hit New Highs: Top 5 Gainers
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In our current U.S. bull market, we are experiencing a declining unemployment rate and a record number of domestic jobs being created. As per the Bureau of Labor Statistics, the U.S. economy created 261,000 jobs in October, the highest so far in 2017, and the unemployment rate of 4.1% was the lowest this year. These economic indicators primarily supported the S&P 500 index’s gain of 15.6% year-to-date.
Impressive third-quarter results and record quarterly GDP numbers also reflected the market’s strength. But, investors have a million-dollar question in mind – how long will the bull market last?
Millennials, also referred to as Generation Y, require making significant equity investments to fund their retirement. Millions of young Americans belonging to this generation will keep the stock market’s bull run intact, per Steve Chiavarone, a portfolio manager with Federated Investors.
Millennials Averse to Stock Investments
The generation born between 1982 and 2004 is referred as Millennials, per Investopedia. This generation is risk averse and holds the majority of their assets in cash rather than investing in the stock market. According to the U.S. global investment management firm BlackRock, millennials hold roughly 65% of their assets in the form of cash, much higher than 58% for average Americans.
Also, Global Investment Survey shows that in comparison with Baby Boomers’ 24% of portfolio allocation in stocks, young Americans are investing only 15%.
What Makes Millennials Conservative?
Investors can beat the market only when the majority of portfolio allocation goes to risky asset classes like stocks. Young Americans have years to retire that allow them a longer period to take risks and fetch returns from the equity market.
But instead of making use of that time, millennials are being conservative, which isn’t profitable for them. The prime reason behind such risk averseness is that this age group is still under the influence of the 2008 Great Recession, notes Global Investment Survey. Student loans and rising rents are also eating into their residual income, leaving almost no room for investment.
What Should the Millennials Ideally Do?
Chiavarone believes that wages will not be very satisfying throughout the work life of millennials, leaving them with inadequate funds for a stress-free retirement life. To evade a post-retirement crisis, young Americans should ideally put their savings in the stock market, the portfolio manager believes.
The change in demographics will help the current four-and-a-half year bull market to last for another 10 years, expects Chiavarone. He predicts that the S&P 500 index will be 2,750 and 3,000 by the end of 2018 and 2019, respectively, significantly higher than the present mark.
Will the Bull Market Last?
Young Americans have almost no other alternative to grow their savings apart from buying stocks.
Meanwhile, Chiavarone reveals that increased participation of millennials will help the market scale new highs. Now, the challenge is to zero in on stocks given the S&P 500 index will keep on surging. We have employed our proprietary Stock Screener to shortlist five stocks leading the S&P 500 index, with a Zacks Rank #1 (Strong Buy) or 2 (Buy).
These stocks also have a VGM Score of A or B. Here, V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three scores. Our research shows that stocks with a solid VGM Score, when combined with a favorable Zacks Rank, offer the best investment opportunities.
Our Choices
Headquartered in Santa Clara, CA, Applied Materials, Inc. (AMAT - Free Report) is a leading equipment supplier to the global semiconductor industry. The company managed to beat the Zacks Consensus Estimate in each of the last four quarters, with an average positive earnings surprise of 2.82%.
The company is expected to see year-over-year earnings growth of 18.9% and 3.1% in fiscal 2018 and 2019, respectively. The company has a VGM Score of B and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
DXC Technology Company (DXC - Free Report) , headquartered in Tysons, VA, is a renowned IT services firm in the world. The company surpassed the Zacks Consensus Estimate in all of the prior four quarters, the average positive earnings surprise being 25.43%.
The #1 ranked player is expected to post year-over-year earnings growth of 138.3% and 16.1% in fiscal 2018 and 2019, respectively. DXC Technology currently has a VGM Score of A.
Based in Santa Clara, CA, Intel Corporation (INTC - Free Report) is the world’s largest manufacturer of semiconductor products. The Zacks #1 ranked firm surpassed the Zacks Consensus Estimate in all prior four quarters, with an average positive earnings surprise of 9.75%.
For 2017, Intel is expected to record year-over-year earnings growth of 19.4%. The company currently has a VGM Score of B.
Micron Technology, Inc. (MU - Free Report) , headquartered in Boise, ID, has established itself as one of the leading worldwide providers of semiconductor memory solutions. The Zacks #1 ranked firm has a strong earnings surprise history, having beaten the Zacks Consensus Estimate in the last four quarters.
The company carries a VGM Score of A and is poised to see earnings growth of 54.7% in fiscal 2018.
Headquartered in San Jose, CA, Western Digital Corporation (WDC - Free Report) is one of the largest hard disk drive (HDD) producers in the United States. The company sports a Zacks Rank of 1 and has surpassed the Zacks Consensus Estimate for earnings in the last four quarters.
Moreover, Western Digital is expected to post year-over-year earnings growth of 43.3% in fiscal 2018. The company currently has a VGM Score of A.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Millennials to Help Wall Street Hit New Highs: Top 5 Gainers
In our current U.S. bull market, we are experiencing a declining unemployment rate and a record number of domestic jobs being created. As per the Bureau of Labor Statistics, the U.S. economy created 261,000 jobs in October, the highest so far in 2017, and the unemployment rate of 4.1% was the lowest this year. These economic indicators primarily supported the S&P 500 index’s gain of 15.6% year-to-date.
Impressive third-quarter results and record quarterly GDP numbers also reflected the market’s strength. But, investors have a million-dollar question in mind – how long will the bull market last?
Millennials, also referred to as Generation Y, require making significant equity investments to fund their retirement. Millions of young Americans belonging to this generation will keep the stock market’s bull run intact, per Steve Chiavarone, a portfolio manager with Federated Investors.
Millennials Averse to Stock Investments
The generation born between 1982 and 2004 is referred as Millennials, per Investopedia. This generation is risk averse and holds the majority of their assets in cash rather than investing in the stock market. According to the U.S. global investment management firm BlackRock, millennials hold roughly 65% of their assets in the form of cash, much higher than 58% for average Americans.
Also, Global Investment Survey shows that in comparison with Baby Boomers’ 24% of portfolio allocation in stocks, young Americans are investing only 15%.
What Makes Millennials Conservative?
Investors can beat the market only when the majority of portfolio allocation goes to risky asset classes like stocks. Young Americans have years to retire that allow them a longer period to take risks and fetch returns from the equity market.
But instead of making use of that time, millennials are being conservative, which isn’t profitable for them. The prime reason behind such risk averseness is that this age group is still under the influence of the 2008 Great Recession, notes Global Investment Survey. Student loans and rising rents are also eating into their residual income, leaving almost no room for investment.
What Should the Millennials Ideally Do?
Chiavarone believes that wages will not be very satisfying throughout the work life of millennials, leaving them with inadequate funds for a stress-free retirement life. To evade a post-retirement crisis, young Americans should ideally put their savings in the stock market, the portfolio manager believes.
The change in demographics will help the current four-and-a-half year bull market to last for another 10 years, expects Chiavarone. He predicts that the S&P 500 index will be 2,750 and 3,000 by the end of 2018 and 2019, respectively, significantly higher than the present mark.
Will the Bull Market Last?
Young Americans have almost no other alternative to grow their savings apart from buying stocks.
Meanwhile, Chiavarone reveals that increased participation of millennials will help the market scale new highs. Now, the challenge is to zero in on stocks given the S&P 500 index will keep on surging. We have employed our proprietary Stock Screener to shortlist five stocks leading the S&P 500 index, with a Zacks Rank #1 (Strong Buy) or 2 (Buy).
These stocks also have a VGM Score of A or B. Here, V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three scores. Our research shows that stocks with a solid VGM Score, when combined with a favorable Zacks Rank, offer the best investment opportunities.
Our Choices
Headquartered in Santa Clara, CA, Applied Materials, Inc. (AMAT - Free Report) is a leading equipment supplier to the global semiconductor industry. The company managed to beat the Zacks Consensus Estimate in each of the last four quarters, with an average positive earnings surprise of 2.82%.
The company is expected to see year-over-year earnings growth of 18.9% and 3.1% in fiscal 2018 and 2019, respectively. The company has a VGM Score of B and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
DXC Technology Company (DXC - Free Report) , headquartered in Tysons, VA, is a renowned IT services firm in the world. The company surpassed the Zacks Consensus Estimate in all of the prior four quarters, the average positive earnings surprise being 25.43%.
The #1 ranked player is expected to post year-over-year earnings growth of 138.3% and 16.1% in fiscal 2018 and 2019, respectively. DXC Technology currently has a VGM Score of A.
Based in Santa Clara, CA, Intel Corporation (INTC - Free Report) is the world’s largest manufacturer of semiconductor products. The Zacks #1 ranked firm surpassed the Zacks Consensus Estimate in all prior four quarters, with an average positive earnings surprise of 9.75%.
For 2017, Intel is expected to record year-over-year earnings growth of 19.4%. The company currently has a VGM Score of B.
Micron Technology, Inc. (MU - Free Report) , headquartered in Boise, ID, has established itself as one of the leading worldwide providers of semiconductor memory solutions. The Zacks #1 ranked firm has a strong earnings surprise history, having beaten the Zacks Consensus Estimate in the last four quarters.
The company carries a VGM Score of A and is poised to see earnings growth of 54.7% in fiscal 2018.
Headquartered in San Jose, CA, Western Digital Corporation (WDC - Free Report) is one of the largest hard disk drive (HDD) producers in the United States. The company sports a Zacks Rank of 1 and has surpassed the Zacks Consensus Estimate for earnings in the last four quarters.
Moreover, Western Digital is expected to post year-over-year earnings growth of 43.3% in fiscal 2018. The company currently has a VGM Score of A.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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