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Earlier this month, Brett Singley, upper right, posed for a picture in front of their condo with his wife, Angelynn, 28, Isla 5, middle, Isaiah 3, right, Ben, 2, and Aria 1 month, in Santa Clarita, Calif. Singley bought the three-bedroom home for just under $300,000 -- $100,000 less than what he was prepared to pay for a house. Even though most millennials don't seem to be buying homes, that doesn't mean they don't want to in the future, says a report issued by Bank of America Merrill Lynch. (AP Photo/Chris Carlson)
As the largest generation in U.S. history, millennials have a lot of potential to change the investment landscape. A couple of weeks ago Goldman Sachs sent out a research note detailing which companies were poised to benefit from this large demographic, in particular from millennial parents. Now Bank of America Merrill Lynch has published one as well.
The main purpose of the note is to identify eight millennial-related investment themes, and then identify a number of stocks with exposure to the trends. But before BofA could do that, its analysts had to take an in-depth look at how millennials differ from prior generations.
Here are some of the findings from the whopping 241-page note.
- Millennials are the biggest generation in U.S. history.
- More of them are single.
- And they are willing to date online.
- Being a good parent is a top priority.
- They are also the most educated generation.
- Ambition is a top characteristic.
- Even though they don't seem to be buying homes, that doesn't mean they don't want to in the future.
- Much of the delay is attributed to student loan debt.
- They are shifting away from beer and moving towards liquor.
- They shop online and on their mobile devices.
- To no surprise, they spend a fair amount of time online, especially via their mobile devices.
- They are far more invested in cash.
- Health and wellness are big priorities.
Based on some of these findings, here are the eight trends BofA identified as millennial-related investment opportunities.
1. Technology- Millennials love devices, ecommerce, online media, games and wearables. BofA thinks Facebook, King Digital, Netflix and Pandora are good ways to play the trend.
2. Consumers- "Generation Me" loves to shop for clothes and spend on beauty and cosmetics. Play the trend with Asos, H&M, and Urban Outfitters.
3. Drinking, dining and health & wellness- Millennials favor healthy eating, quick and casual restaurants plus online dining options. Oh, and they like working out. Play the trend with GrubHub, Adidas, Asics and Chipotle.
4. Households- Millennials have been delaying buying houses but that might soon change. BofA reckons home-ownership rates are bottoming. Bed Bath and Beyond, Lowe's, and Williams-Sonoma are poised to benefit.
5. Financials- Millennials are all about online banking and low-cost financial solutions such as the new crop of robo wealth-advisors. Play the trend with American Express, Discover Financial, eBay and Visa.
6. Education- Millennials are the most educated generation in history and that's likely to continue thanks to a tight labor market. Play the trend with Chegg, DeVry, Pearson, and Adobe.
7. Women- Companies poised to benefit from the spending of millennial women include Children's Place, Coach, Michael Kors and CoverGirl, according to BofA.
8. Sharing Economy- Millennials favor sharing services for everything from car rentals to hotel rooms and self-storage. Play the trend with Airbnb, Lyft, Rent the Runway, and Kickstarter.
To contact the author on this story: Julie Verhage at jverhage2@bloomberg.net To contact the editor on this story: Tracy Alloway at talloway@bloomberg.net