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Stocks for Generation Y

|Includes: AEO, DIS, GPS, The Coca-Cola Company (KO), MSFT, TGT

2001 through 2011 has been classified by many financial writers as, “the lost decade,” or in other words, a time period where stocks appreciated about the same as this nation’s desire to watch soccer. For Baby Boomers, this is detrimental to their financial goals because the decades left until retirement are dwindling. An often overlooked group affected by the recent market performance is Generation Y – those that are between the ages of 18-30. A recent survey by MFS Investment Research found that 40% of Generation Y agreed with the statement, “I will never feel comfortable investing in the stock market.” For someone who is fits into this age group and whose stock market fascination was a product of the tech boom of the late 1990’s, this survey is disappointing. While experiencing the tech bubble bursting, the 9/11 attacks, and the recent financial crisis during their financially fragile years, Generation Y has many reasons to be skittish about investing in the market. What needs to be reinforced is that the stock market is a great vehicle for individuals, especially younger individuals, to save and grow their money for the future. Not to mention it provides the satisfaction of owning a piece of a corporation that is creating economic value daily. I have identified a few stocks below that Generation Ys most likely interact with on a daily basis that have proven to weather many economic downturns and are currently trading at bargain levels. Gen Ys should take a look at these stocks for potential investments to facilitate becoming interested in the market. Coca-Cola – (Ticker KO). P/E of 13. This 125 year old company has weathered two world wars, two huge recessions and has become more than a distributor of sugary soft drinks. Their Vitamin Water, Minute Maid and hundreds of other brands are being sold in over 200 hundred countries. International sales account for more than 75% of Coke’s total. Disney  – (Ticker DIS). P/E of 13. Any time you watch ESPN, ABC TV or Pixar and Marvel films you are interacting with Disney. The company has grown itself to a distributor of more than Mickey Mouse and Bambi products. Not to mention the historical business of their theme parks. Search “kids going to Disney” on YouTube and witness the power of Disney’s brand. Microsoft – (Ticker MSFT). P/E of 9. The last few years might have seen Microsoft deploy new products at a slower pace than their rivals but the company still has a dominant market share in operating systems and office products, the lifeblood of productivity for the majority of corporate America. Plus any gamer out there who plays with an XBOX or the highly successful Kinect motion device should notice that Microsoft still has it. Target – (Ticker: TGT). P/E of 11.  The company has done a fantastic job maintaining comparable prices with discounters like Wal-Mart (Ticker: WMT), while maintaining a mid-upper scale image. With the middle class dominating in numbers here in the US, this is a good market to… target (pun intended). There are plenty of other stocks priced at similar bargain levels. Generation Ys can find their own bargains by paying attention to the brands they interact with most often. Pittsburgh based American Eagle (Ticker: AEO) is a good example or GAP (Ticker: GPS), which owns the Banana Republic and Old Navy brands is another. The market sure isn’t riskless, and will continue to provide volatility in the future. But if Generation Y can begin to take small steps, coordinate with a financial professional and become interested in the market, the volatility swings won’t seem as daunting.

Author’s disclosure – Author currently owns shares of Disney.