Millennials are influencing everything these days, it seems. Morgan Stanley says their preferences should inform your stock picking.
Analysts at the bank have gathered data on how and where the demographic shops, and which consumer discretionary stocks are best positioned to reap the benefits.
Consumer Discretionary Stock Picking
"From Gen Y, compared with the average consumer, America's youth spends a disproportionate share [of income] on cellphones, apparel, Food Away from Home, housing and vehicles," the analysts wrote in a note out Friday morning. "They use technology for price discovery, shrewdly seeking value in whichever channel (store or online) offers the best deal, but still seek out brands, according to our survey work."
There are eight discretionary spending stocks in particular that could benefit significantly from these preferences, Morgan Stanley says. And all eight have excellent digital operations.
In food, Morgan Stanley singled out:
- Chipotle: It just saw digital sales increase 100% year-over-year, with 16% of its sales through its app, according to its latest earnings release out this week.
- Dominoes: Around 65% of its U.S. sales are through its digital channel, according to its earnings release.
- Starbucks: It's had its app for a while, and still saw 13% year-over-year growth in number of rewards members.
As for apparel, Morgan Stanley likes:
- Ross Stores
Burlington is expanding its brand assortment, according to D.A. Davidson analyst John Morris, while Nike is accelerating its direct-to-consumer initiative, largely driven by omni-channel sales.
As for beauty, the bank likes:
- Ulta Beauty
Intel, RealMoney's stock of the day, guided for full-year revenue of $69 billion in 2019, short of the $71 billion analysts were looking for, as memory chip pricing remains a concern.
RealMoney's Kevin Curran, however, writes that the possibility of the autonomous driving market exploding could be a savior for Intel's chip sales.