According to a number of demographers and researchers, Millennials or Generation Y (‘Gen Y’) are defined as those born between the early 1980s and the early 2000s, making the generation currently aged between 16-36. So, they’ve got some time to go before retirement. But it’s never too early to invest for the future and prudent to start sooner rather than later.
Millennials, which make up around a quarter of the population in the US and account for 21% of consumer discretionary purchases (estimated at over $1 trillion), are certainly driving changes throughout a number of industries. And, their exposure to and love of technology is enabling them to do so.
But have all of them considered investing for their retirement yet or what stocks would they stick in a potential portfolio? As such I thought it could to be interesting exercise to present companies that could offer be good future prospects for the ‘Gen Y’ fraternity with a bit of British slant.
In a quest to offer some advice for this generation The Share Centre have come up with five companies – across all risk levels from lower to medium and higher risk – that have robust future prospects and could provide long-term growth. So here we go.
1.Vodafone: One To Stay Connected With
Suitable for lower-risk investors seeking income
“Mobile communications company Vodafone has been streamlining its business, selling some of its non-core assets, using the proceeds to pay off some debt and ultimately this strategy has allowed the group to concentrate on other areas,” says Forrest, who joined the UK broker in 2014 and has previously advised private clients on equities at firms including NatWest Stockbrokers and Redmayne Bentley.
Vodafone, telecoms giant and a FTSE 100 constituent, is a renowned name amongst its competitors and the fact that there is continued good growth in demand for data services and the emerging markets is “credit to the work it is doing” according to Forrest.
In particular, there has been surging demand for data services that is driving revenues across Asia, Africa and the Middle East. And, organic service revenues in these emerging markets in between this April and June have helped boost organic services revenues by 7.7% during that period.
On Vodafone he adds that: “Millennials should appreciate that investment programmes have transformed the quality of their technology, enhanced customer’s experience and should enable further growth and expansion of services.” Recovery within the European side of the business is being driven by strength in German, Italian and Spanish markets.
The shares were trading today at around £2.22 a pop just after midday (12.49 GMT) in London – 18p off their 52-week high – and up 3.47% year to date (YTD).
While the 2016 forward Price-Earnings (P/E) ratio stands at 32.8, the yield is at a solid 5.1% that will appeal to those seeking more than respectable dividend income. Dividend payouts of 12p per share for both fiscal 2017 and 2018 forecast have been forecast by City analysts – up from 11.45p in 2016.
2.Inmarsat: One To Keep On Your Radar
Suitable for medium-risk investors with a balanced portfolio
Inmarsat, which was established in 1979 by the International Maritime Organization to enable ships to stay in constant touch with shore no matter how far out to sea, operates a global communication satellite system that provides voice and high speed data services on a worldwide platform.
Forrest notes: “There seems to be an on-going interest in technology and communication companies amongst investors, and their relevance to Millennials may make them more attractive. Although the group has had a difficult period of late, we believe that longer-term attractions still remain.”
“The aviation division is still experiencing high demand and investors should appreciate government spending is picking up,” says Forrest.”
In addition, Inmarsat is currently developing software, which it hopes will enable it to deliver seamless global coverage at speeds of up to 50MB/s for users in governments, maritime, energy, enterprise and aviation sectors, giving it a competitive edge with faster broadband speeds.
The shares (Inmarsat Plc Ord EUR0.0005), which have been as high as £11.50 during 2016, were trading up +22.43p (+2.94%) at £7.8643 late this Thursday (8 September) in London. On the previous day’s close of £7.64, this implied a market capitalization of £4.39 billion. The forward P/E ratio stands at 20.4 and the yield is 5%.
3.ITV: One To Tune Into
Suitable for medium-risk investors with a balanced portfolio
ITV, an integrated producer broadcaster that operates the largest commercial family of channels in the UK, will be a recognisable name amongst Generation Y due to this group being key consumers of the programmes the channel broadcasts.
Results continue to demonstrate that the business is moving in the right direction. Further, analysts are encouraged by the improvement at its Studios business, and the fact that it is now in a position make a number of acquisitions, geared towards boosting its production business.
“With so many options now available to consumers ITV has had to fight hard to maximise its audience share,” says Forrest, who holds a certified Statement of Professional Standing and back in 2010 passed the Chartered Institute for Securities & Investment Advice Diploma.
In a fast changing environment the changes that have been made in the group appear to have “come in time” to save what was once a troubled company according to the analyst. “Add to that the debt situation has been addressed and with the improvement in its balance sheet, dividends are set to rise further,” he points out.
Nevertheless, ITV shares were changing hands at around £2.057 today (15:31 GMT), which is 18.25% (45.80p) off the price exactly one year ago (£2.509) and even lower than the past high of £2.7910. The 2016 year high and low has ranged between £2.77 and £1.55, with the current forward P/E being 12.4 and the yield looks interesting at 7.9.
4.Restaurant Group: One Picked Off The ‘Specials’ Board
Suitable for higher risk investors with a balanced portfolio
The Restaurant Group’s (TRG) portfolio consists of over 450 restaurants with well-known brands including Frankie and Benny’s, Chiquito, Garfunkel’s and Home Counties. The company focusses on locations near to cinemas, and investors should also appreciate that the group often has more than one restaurant in operation at the same site, thus limiting competition.
Forrest notes: “It is worth pointing out that the group has experienced challenging trading conditions this year, reflecting a softening in consumer demand and weaker general consumer confidence.”
TRG shares were at £3.995 (+11.60p/+2.99%) in afternoon trade this Thursday on a forward P/E of 13 and yield of 4.5 – off from a 2016 high of £6.90. This puts the current price at exactly where it was in February 2013. Contrast this with early last November when the stock price hit a peak of £7.25.
Nevertheless, management still see plenty of opportunities to grow the estate further and shareholders could benefit from both a recovering share price and the tasty 25% discount that they get at the restaurants.
“Although it might not be to everybody’s taste, there is no denying the popularity of the group’s offerings, especially amongst younger people,” he adds.
5.Iomart: One Cloud That Could Have A Silver Lining
Suitable for higher risk investors seeking growth
Iomart, which is listed on the LSE’s Alternative Investment Market (AIM), has been involved in cloud computing long before cloud computing became fashionable. It is one of the UK’s leading companies in an industry that is expected to grow fairly rapidly as companies and consumers generate more data and become comfortable with having that data located offsite.
Forrest says: “Millennials should appreciate that the company expects the creation of data to be exponential for some years to come.” Indeed, Iomart owns and operates eight data centres spread out across the UK as well as six in the US and one each in Dubai and Singapore.
“Moreover, it has partnerships and programmes with some of the largest computing businesses in the world such as Microsoft and Dell,” he notes. “And, this business is operationally geared, which means it can take more business for relatively little cost.”
Shares in Iomart, which have traded between a 52-week high of £3.15 and low of £2.15, have staged a good recovery since their lows in 2014 and cements The Share Centre’s belief that the “long-term prospects have not fundamentally changed.” The stock was trading today as of 2.04pm GMT at £2.9125p (-13.75p for the day), on a forward P/E of 17.4 and a modest yield of 1%. Carpe diem.
Stock Picking Overall
As regards choosing stocks more generally, Forrest observes: “For Millennials, it is more important to choose companies that are recognisable and have good growth prospects, rather than choosing them based on what index they are in.”
He adds: “Given that Millennials are essentially at the beginning of their investor journey, it’s highly beneficial if they have some familiarity with the products or services of companies they invest in, in order to keep a continued interest.”
So given that and on that premise, they may find themselves investing in companies across a range of the UK indices. However, as Forrest points out: “They must be prepared to accept that investing in smaller companies and those listed on AIM, does come with a higher level of risk and uncertainty.” Carpe diem.
source : forbes.com