Millennials is the term commonly used to refer to people who have attained middle age. This has been in use from around the start of the 21st century. This generation makes up around 4 million of the Australia’s largest age group.
According to the latest parameters, the birth years for millennials is considered in the range of 1981 and 1996. The oldest members being around 37 years old and the youngest just 22.
Millennials have a long way to go prior to their retirement. Remarkably, this age group reveals few special traits when it comes to investments. With age on their side, they have a prolonged time horizon for investment. This enables them take chances and aim more on capital appreciation rather than dividend income. They enjoy investing in stocks that have the ability to deliver positive returns in the long run.
Moreover, as Baby Boomers are headed for retirement, the millennial and Gen Z group is set to give a boost to Australia’s economy by delivering the power of youth to its workforce. Changing spending patterns, improved productivity, better wages and a greater number of houses to be built should boost Australia’s economic growth in the coming years.
4 Trends on Millennial Money Execution
Millennials are less interested in using credit cards:
In terms of owning a credit card, millennials are 37% less expected to use the same as compared to the older Australians. Millennials are turning to Buy Now, Pay Later (BNPL) concept as they consider credit cards to be costlier and riskier.
Millennials are sensible spenders
Millennials are spending wisely by deferring home ownership, spending less on alcohol and tobacco and spending more on areas of public transport and personal health insurance.
Millennials are into more savings as compared to their parents
Approximately 30% of millennials are expected to save on a regular basis in contrast to their parents. Further, at least 80% of millennials use a budget for their long-term financial planning as compared to 2/3rd of older generations.
Millennials are using latest technology to handle their finances
Many of the older Australians still budget on paper or in their heads, millennials are harnessing technology to keep a track on their spending power. Approximately, 93% of millennials compare prices online before spending on an item which cost $100 or more.
Probable Challenges for Millennials
The group is expected to have a lengthier life, due to constant improvements in medical science and healthier lifestyles. Consequently, there is a need for more funds for this generation. Rising healthcare costs also pose a serious challenge.
Although Australian citizens will have social protection, but it is challenging to say whether it will be sufficient to sustain their lifestyle or not. Millennials are also prone to economic downturns. In fact, this generation has been badly shaken by the great recession and the social harm caused by it.
According to Australian Bureau of Statistics (ABS), millennial population in Australia is anticipated to grow by 17% over the next 10 years. This section of population has prospects of becoming 75% of the workforce in Australia by 2025.
Gone are those days when millennials were deemed to be reliant on parents and doubtful to have excess cash to invest in the stock market. Their interest and participation in the financial markets are expected to rise in the coming years.
Selecting the Stocks
Here we discuss four stocks with outstanding growth potential and strong fundamentals:
Pro Medicus Limited (ASX: PME)
A leading imaging IT provider, Pro Medicus Limited (ASX: PME) offers its radiology IT software and services to hospitals, health care groups and imaging centers.
Financial highlights (Year ended 30 June 2019):
- Pro Medicus reported revenue of $50.11 million, up 47.9% year over year in FY2019.
- The company reported net profit after tax of $19.13 million, an increase of 91.9% year over year.
- The company’s EBIT Margins increased to 51.6% for FY19.
- The Underlying after-tax profit came in at $22.74 million in FY19.
Pro Medicus has a market cap of $2.33 billion with ~ 103.95 million outstanding shares. The Pro Medicus stock price closed at $22.760 on 17 December 2019, up by 1.698% relative to the previous close.
Xero Limited (ASX: XRO)
Xero Limited provides an online business platform to SMB and incorporates over 400 add-on applications allowing customers to adjust Xero to their needs. The company has a total subscriber base of over 2 million worldwide.
Highlights for 1H FY20
Xero reported strong results for its half-year ended 30th September 2019:
- The company’s operating revenue came in at NZ$338.7 million, up 32% year over year. Total subscribers for the period came in at 057 million, up 30% year over year.
- Annualised monthly recurring revenue (AMRR) increased 30% year over year and came in at $764.1 million.
- Free cash flow for the period was $4.8 million as compared to negative $9.8 million reported in the year-ago period.
- Net profit after tax for the period came in at $1.3 million. EBITDA during the period stood at $65.9 million (excluding impairments).
Xero has a market cap of $11.47 billion with ~ 141.46 million outstanding shares. The Xero stock price closed at $81.100 on 17 December 2019, up by 0.062% relative to the previous close.
WiseTech Global Limited (ASX: WTC)
WiseTech Global is a provider of cloud software solutions to the logistics industry both internationally and domestically. The company’s leading product, “CargoWise One”, offers end-to-end logistics solution and forms an important part of the supply chain all over the world.
Highlights for FY2019 for the Period Ended 30 June 2019
- The company reported revenues of $348.3 million, up 57% on a year over year basis.
- Net profit after tax increased approximately 33% and came in at $54.1million.
- EBITDA for the period stood at $108.1 million, an increase of 39% year over year.
- The company paid a final dividend of 1.95 cents per share in FY19 (fully franked).
WiseTech has a market cap of $7.63 billion with ~ 318.19 million outstanding shares. The WiseTech stock closed at $23.400 on 17 December 2019, down by 2.419% relative to the previous close.
Clinuvel Pharmaceuticals Limited (ASX: CUV)
Biopharmaceutical company Clinuvel pharmaceuticals limited (ASX: CUV) is devoted to the enhancement of treatments for skin diseases. The company’s key product SCENESSE is available for over 1,400 patients worldwide via 4,500 doses. This is used for treatment in United States for adult patients with EPP.
Highlights for FY2019 for the Period Ended June 2019)
- The company’s total revenue stood at $31.05 million, which increased 21.8% on a year over year basis.
- NPAT came in at $18.123 million, up 40% year over year.
- Earnings per share for the period came in at 37.6 cents, up 35.7% on a year over year basis.
- Net cash from operating activities was $18.46 million as compared to $11.69 million in FY18.
- Net cash outflow from investing activities amounted to $0.257 million, and Financing cash outflow was reported at $1.03 million.
- The company existed the FY19, with cash and cash equivalents of $54.27 million.
Clinuvel has a market cap of $1.37 billion with ~ 49.41 million outstanding shares. The Clinuvel stock closed at $27.370 on 17 December 2019, down by 1.511% relative to the previous close.
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