How to Invest in Seniors' Online Spending?

Bob Tedeschi cites the following statistic in an article in the NY Times: "a recent Nielsen survey found that 27.4 million people age 55 and older bought something online in the last six months, compared with about 26 million a year ago. By contrast, the number of adults who bought something online in the last year actually dropped, to 107.4 million from 112 million." The question for investors is how to play this trend.

The article provides two hints. First, Heather Dougherty, a Nielsen/NetRatings analyst, is quoted as saying that "since last June, senior citizens have bought clothing, shoes, flowers and gifts at a faster rate than the population in general".

Second, much of the article is devoted to a description of a partnership between Travelocity, owned by the Sabre Group (TSG), and the AARP to build an AARP-branded travel web site for seniors, AARP Passport (at www.Travelocity.com/AARP).

So investors can play seniors' increasing adoption of the Internet via Internet travel stocks and various areas of e-tailing: Travelocity (TSG), Expedia (EXPE), 1-800 Flowers (FLWS), Red Envelope (REDE), Bluefly (BFLY) and perhaps Amazon (AMZN).

But the problem with these stocks is that they get an insufficient proportion of their revenues from seniors, so they're nowhere close to being "pure plays" on this theme. Which stocks are?

I have one idea: Bankrate (RATE). Many seniors live off fixed income investments from their savings, and Bankrate allows them to comparison shop for interest rates. Once the housing market slows down and Bankrate's mortgage-lead business dries up, Bankrate will become more of an Internet fixed-income pure play.

Other suggestions appreciated.

Comments

[Richard Bri...:]

Boomers are going to have a HUGE impact on the various markets, especially orthopedics. A lot of the ortho companies have been beaten up for the past year. I like ZMH, SYK, SNN, and BMET....

2006 Jun 14 12:20 PM

[Zack Miller:]

I totally agree but the issue at hand here is whether there is an online play leveraged to the senior spend...I like the idea of RATE.

What about HLTH? Most of their revenue is derived from payor-doctor/practice management relationships but they have still have the WebMD consumer businesses.

2006 Jun 15 08:56 AM