Millennials Are Behind This Stock’s Rise

Millennials Are Behind This Stock’s Rise

I don’t need to read Wall Street research reports on the spending habits of millennials.

I just look across my dinner table. Three of my four sons are millennials.

So, I watch what my boys do, what they buy and how they invest.

That’s why I laughed when I saw this Wall Street Journal article in 2019, before COVID-19. It called millennials a “generation of renters.”

Analysts believed they preferred to “do” things like travel than “have” things like homes.

I really wondered how many of these analysts actually had kids — and of those, how many were millennials.

Because if they did, they would’ve seen a different story playing out…

The Real Story

More than half of the nation’s population — 166 million! — are millennials or younger.

percentage of population by generation

Millennials range in age from 25 to 40. And a few years ago, the majority of them were still on the younger end of that range.

As they were just getting their bearings in their careers, they were putting off buying homes.

This makes all the sense in the world. I did the same when I got married in my early twenties in 1986.

My wife and I rented an apartment and had our first child. Our long-term plans were never to rent forever … only until we had enough for a down payment on a house.

The same thing was happening with millennials. Just because they weren’t buying homes at first didn’t mean they wouldn’t buy homes eventually.

This past summer, I shared this with my Alpha Investor readers:

The biggest segment … is turning 30. And this segment is usually the one that fuels homebuying.

I saw this as a huge demographic tailwind for the housing market. My research was showing me that as millennials aged, they were projected to buy over 15 million homes over the next decade.

And now, we’re seeing this trend play out just as I said. From The Wall Street Journal just a few days ago:

Since 2019 … [millennials] have reached a housing milestone, accounting for more than half of all home-purchase loan applications last year.

Basically, it was just a matter of time before the buying started…

Go Big, or Go Home

What happened was that they chose to rent for a lot longer than previous generations. Instead of buying a $150,000 house, they chose to save up their pennies and buy a $300,000 house.

Millennials live by the saying of “go big, or go home.”

Wall Street wasn’t seeing the bigger picture in regards to the housing market. That was our opportunity.

I spent my time researching companies that would benefit from this trend. And I recommended Masco Corporation (NYSE: MAS) in July.

The company is a leader in home renovation and repair supplies, like paint and faucet fixtures. With increased homebuying and need for renovations and repairs, I saw it as a no-brainer.

As demand for housing surged, homeowners would need to fix and repair. Masco would benefit greatly.

Plus, it had a rock-star CEO at the helm and its stock was trading at an attractive price.

In five months, we’re up about 17% on the position. Masco’s stock is now trading above my buy-up-to price. So, I don’t recommend buying more shares today.

But this company has a bright future ahead. We’ll continue to ride this trend for a long while.

So, here’s the Real Talk from this: Forget the forecasters with their crystal balls. They never work and never will.

It isn’t hard to spot the next big trends. Many times, it’s right under our noses. And the way to make big money is to jump on these trends in the early innings.

Regards,
Charles Mizrahi

Charles Mizrahi

Founder, Alpha Investor

P.S. I’ve recently identified another similar opportunity in the markets. In fact, it’s benefitting from other mega trends that I first saw in November 2019.

I’ll be releasing all the details next week in the next issue of Alpha Investor. So, keep an eye on your inbox!

And if you’re not already an Alpha Investor, you can find out how to become one right here — before I release this new opportunity.