BofA picks the best stocks for 10 shifts in the face of the planet

Jun. 13, 2022 5:45 AM ETThe Walt Disney Company (DIS), JPM, HDPGNY, OWLT, PUKPF, UBS, AMN, WELL, GRAB, SE, UDR, DHI, ASGN, FVRR, UPWK, HOLX, OGN, VSCO, CURV, RBLX, COIN, SQ, TRUPBy: Kim Khan, SA News Editor38 Comments

Global communication network concept. Various ethnic group people.

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BofA Securities is out with a list of stocks that should benefit from a transforming world.

"The changing composition of the global population in the decades to come will be transformational," BofA analysts wrote in a note. "The global population has doubled in the past 50 years, but declining fertility, an ageing society and a decreasing working-age population in most developed economies are already having implications such as migration, innovation (e.g. automation), urbanization, and skills gaps as industries, and the next generation of workers required to fill them, transform."

They identified 10 major demographic themes and tapped the best names from the global research universe.

Peak Fertility - "The era of rapid global population growth is ending."

  1. Progyny (PGNY) "Progyny is the only publicly traded provider of fertility benefits in the United States."
  2. Owlet (OWLT) "Owlet’s products could help save on healthcare costs while also making parenting simpler overall."

Graying Population - "The number of people aged 65 or over is expected to double from 2019-50, with those under 25 projected to peak and then decline slightly."

  1. Prudential (OTCPK:PUKPF) "Demographics is a major driver of the growth opportunity in Asia that Prudential is uniquely exposed to within the European insurance sector."
  2. JPMorgan Chase (NYSE:JPM) "JPM is well positioned to benefit from the two major shifts in demographics: 1) growing/ageing affluent client base and 2) secular shift toward digital banking channels."
  3. UBS (UBS) "We note in particular that Asian wealth is often first generation and UBS has 15% of its GWM assets in Asia. These individuals, amongst whom UBS has a 50% market share, are likely to become more active in diversifying their wealth as they retire and begin legacy planning."
  4. AMN Healthcare (AMN) "The labor vacancy rate (open health care jobs as a percentage of all jobs) had grown to a 20-year high by the end of 2019, before COVID caused the situation to worsen even more as demand spiked during the pandemic, while nurses were out on quarantine, and increasingly leaving the workforce from burnout."
  5. Welltower (WELL) "Population trends and increasing awareness of the benefits of assisted living and memory care options bode well for the industry’s prospects."

New Asia - "India is set to overtake China as the world’s most populous country by 2025, to account for 24% of the incremental workforce globally in the next decade. The Philippines, Vietnam and Indonesia are also expected to maintain relatively young populations."

  1. Grab (GRAB) "As usage improves across the region, online penetration of food delivery & mobility is expected to increase from current low levels of 10%/3% respectively. We expect Grab to be a direct beneficiary of this trend given market leadership in mobility & delivery across Southeast Asian markets."
  2. Sea Limited (SE) "Sea is uniquely positioned with its offerings across online gaming (Garena), e commerce (Shopee), and digital financial services (SeaMoney) present to a wide stretch of mobile-first and Internet-first audiences."

Urban vs. Rural - "By 2030, the UN expects the world to have 43 megacities (vs 31 in 2018) with a population of 10m+, with 66% of the global population living in cities by 2050 on average, but this rises to 87% in developed countries (vs 70% in 1980)."

  1. UDR (UDR) "We like UDR's focus on resident satisfaction through its NextGen operating platform, especially as the world continues to value low-touch experiences and services."
  2. Home Depot (NYSE:HD) The "migration to larger living spaces has led to higher levels of renovation activity, after over a decade of underinvestment in US housing improvements since the housing bubble burst in 2007, directly benefitting home improvement retailers such as Home Depot, the largest retailer in the category in the US."
  3. D.R. Horton (DHI) "In our view, the company’s acute focus on high-quality, affordably-priced housing positions it extremely well, given the ongoing return of the entry-level/first-time homebuyer and the strong wave of Millennials reaching prime home-buying age over the next five years."

Labor/Work - "The global working-age population has peaked (at 66%) and is declining, per the World Bank, owing to an ageing population with reducing fertility and participation rates, compounded by a geographically concentrated workforce facing several structural skills gaps."

  1. ASGN (ASGN) "The low US unemployment rate, rising job openings, and elevated voluntary quit rates among skilled workers create a positive demand backdrop for ASGN’s staffing business."
  2. Fiverr (FVRR) "With 59mn Americans freelancing during the last 12 months, we expect growth opportunities to remain strong within the industry."
  3. Upwork (UPWK) "We expect the gig economy to continue to grow in the 10-20 years when Gen C enters the workforce."

Diversity & Inclusion - "Cultural and institutional bottlenecks and gaps exist within these societal groups. Unlocking them could yield considerable economic benefits and mitigate some of the challenges related to an ageing reducing workforce."

  1. Hologic (HOLX) "As the US market leader in digital mammography systems, Hologic helps ensure better breast health. Hologic’s Skeletal Health business provides bone densitometry devices that help diagnose and monitor osteoporosis."
  2. Organon (OGN) Management "intends for OGN to be not only a pharmaceuticals company but to include devices and diagnostics as well if they are beneficial to women’s health."
  3. Victoria's Secret (VSCO) "It continues to explore collaborations to display additional diversity and inclusion (D&I) efforts, expand into plus size and age ranges, and lead marketing efforts that highlight inclusivity."
  4. Torrid (CURV) "Less than 2% of apparel retailers specialize in plus size, whereas demand for plus size offerings is increasing much more rapidly than that for general apparel, indicating ample opportunity to broaden the brand’s reach within the $85bn US plus size market."

Gen C - "Born after 2016 into an online, decarbonizing world, Gen C is the first generation that won’t remember the outbreak of the coronavirus, but it will have a significant impact on the world they live in."

  1. Roblox (RBLX) "As Gen C grows into its teenage years, we think they could view Roblox as a multi-purpose platform, similar to how Social Networks were viewed before they grew beyond their core university student demographic."
  2. Coinbase (COIN) "The Gen C demographic will have an expectation for a digital lifestyle, including as it relates to their money and investments."
  3. Block (SQ) "Cash App users tend to skew towards a younger generation, who are typically more tech savvy and more willing to try new technologies than older cohorts."
  4. Trupanion (TRUP) "The global pet care market is expected to grow at a 7.4% CAGR throughout 2022-2027. In 2021, $126.6B was spent on pet care in the United States."
  5. Disney (NYSE:DIS) "DIS has not only captured a viewer’s time to watch a movie, it has also supplemented it with a trip to a corresponding theme park exhibit."

See Citi's screen for quality growth stocks.

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