Much has been made about the reckless trading activities of millennial investors on the trading platform Robinhood. But the truth of the matter is, some of the top picks by millennial investors have trounced the S&P 500 by a considerable margin. For instance, the top three stocks owned by millennials, according to the Apex Clearing Next Investor Outlook as of Q3 2020, were Tesla (TSLA), Apple (AAPL), and Amazon.com (AMZN).
TSLA is currently up 428.6%, AAPL is up 70.6%, and AMZN is up 86.3% year-to-date. Compare that with the 11.1% return for the SPDR 500 ETF (SPY), and you can see that the millennial crowd has picked some real winners. Apex Clearing studies more than 1.5 million investment accounts held by people with an average age of 31 years old. Millennials are the largest living generation, so investment advisors and hedge funds are watching their investment preferences. Their picks are slowly affecting the market.
These three stocks were not only the favorites by the millennial generation, but were also in the top three stocks of Generation Z, Generation X, and the Baby Boomer generation. Now let’s take a look at why these three stocks are so popular with millennial investors.
TSLA has been one of the biggest names in stock investing this year. The company’s progress is tracked daily by young investors taking advantage of its seemingly unstoppable stock price. The company’s electric vehicle growth is going according to plan, as the company reported that it delivered 139,300 vehicles in the third quarter.
That was a record for the company. It also exceeded analyst expectations of 137,000 vehicles. Third-quarter deliveries were up 53.6% compared to the previous quarter. At its recent Battery Day, the company outlined a plan to reduce battery costs by 56% and boost vehicle range by 54%. If those goals go according to plan, I don’t see how TSLA won’t remain the dominant electric car company for the foreseeable future.
The next frontier for TSLA is the energy market. The company’s solar power and battery-powered energy storage products could lead to a business as big as its automobile business. The TSLA already has a utility-scale energy storage product, Megapack, which is profitable and seeing heavy orders. The firm reports its latest financial results on October 21st, so we should have a better idea of how the company performed over the last quarter.
The stock is rated a “Buy” in our POWR Ratings system. The company holds a Trade Grade of “A” and a grade of “B” in the remaining POWR components: Buy & Hold Grade, Peer Grade, and Industry Rank. It is also the #4 ranked stock in the Auto & Vehicle Manufacturers industry.
AAPL is one of the largest companies in the world and the biggest name in consumer technology. The company has a healthy balance sheet and a strong business model. It is also one of Warren Buffet’s favorite stocks, comprising almost half of Berkshire Hathaway’s (BRK.B) invested portfolio. The company has been a leading technology firm due to its substantial competitive advantages with the iPhone line, iPads, and now Apple Watches.
The company has also waded into the other markets such as Pay with Apple Pay, and streaming with Apple TV. These products increase cash flow to the company’s already flush balance sheet. AAPL had $93 billion in cash at the end of June. That’s more than the GDP of some countries. Its services segment is expected to drive revenue over the long run.
Even with the additions of new products and services, the iPhone still accounts for most of AAPL’s total revenue. Revenue for the smartphone should increase late this year and into next year. The company is unveiling its next-generation 5G device on October 13th. Sales of the new iPhones are expected to soar with the latest 5G technology.
AAPL is rated a “B” in our POWR Ratings system. It holds a grade of “B” for Trade Grade and Industry Rank. It is also ranked #4 out of 30 stocks in the Technology – Hardware industry. The company reports its latest earnings on October 29th after the close.
One company that has benefited from the pandemic is certainly AMZN, and investors have noticed. The changes in consumer behavior from the pandemic has resulted in a spike in demand for e-commerce and cloud computing services. AMZN should continue to benefit from these changes with a rising e-commerce platform and its rapidly growing AWS business.
As the company invests in its one-day delivery initiative, it should see growth in its Prime membership base. The company has also branched out into artificial intelligence and entertainment streaming. AMZN is also the leader in the $5.7 billion smart speaker market. It recently announced a ton of new hardware products, including a collection of 4th generation Echo smart speakers, new Fire TV Stick video streamers, Eero Wi-Fi routers, and new Ring security cameras.
AMZN’s highly awaited Prime Day will take place on October 14th and 15th. For these two days, Prime members can make purchases at heavily discounted prices. This will lead into the holiday season where AMZN’s shopping platform should see another surge in revenue. The company’s earnings are expected to grow by 40% in 2021 and revenues by 20%.
AMZN is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” in Trade Grade, and a grade of “B” for Buy & Hold Grade, Peer Grade, and Industry Rank. The company is also the #9 ranked stock in the Internet industry. AMZN is expected to announce its latest financial results on October 22nd.
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About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More…
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