The net worth of millennials will quadruple over the next decade, says Cowen. Here are 8 key investing themes to follow and 12 stocks to buy

  • Millennials share of the United States’ net worth is expected to quadruple by 2030, Cowen’s equity analyst, John Kernan, said in an October 14 research report.
  • “Gen Z and Millennial consumers should grow to 70% of the global population by 2028 versus 60% today, facing different ethnic compositions and wealth distributions than prior generations,” Kernan said.
  • Analysts at Cowen surveyed 1,200 US adults from the ages of 18 to 34 to understand consumer behaviors. They identified 8 key themes and provided 12 stock recommendations to capitalize on the transfer of wealth to the millennial generation.
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The habits and behaviors of millennials are fascinating to the older generations. And their share of total US net worth is expected to quadruple by 2030, according to John Kernan, an equity analyst at investment bank Cowen, who says investors that understand this generation of consumers will be best positioned to capitalize on the great transfer of wealth that will eventually take place. 

Cowen recently conducted its third annual survey into the behaviors of millennials – those born roughly between 1980 and 2000 – and Generation Z – those born between 1996 and 2010 – for insight into these groups’ behaviours. The survey interviewed 1,200 US adults from the ages of 18 to 34, benchmarked against 1,500 US adults from the ages of 35 to 55.

“As these cohorts, who have grown up in the digital age, grow older and experience rising income, along with potential for substantial wealth inheritance estimated at $30 trillion over several decades, consumption patterns of these consumers could lead to profound shifts in the retail and payment industries, rendering them a critical demographic for investor focus across consumer and tech verticals,” Kernan said.

Graph on Millennial and Gen Z evolution from Cowen research note on October 14

According to an Accenture report, the peak of wealth transfer will occur between 2031 and 2045, with around 10% of total wealth of the US changing hands every five years. As millennials and Gen Z see their wealth grow, their decisions around shopping habits, consumption behavior and savings pattens will likely have an impact on the consumer, e-commerce, payments and restaurant industries.

Cowen’s survey identified eight key themes that will have an effect on growth and risk across these sectors and the bank’s team of equity analysts identified 12 stocks that will be well placed to benefit from that broader shift in consumer behaviors.

“Gen Z and Millennial consumers should grow to 70% of the global population by 2028 vs. 60% today, facing different ethnic compositions and wealth distributions than prior generations,” Kernan said.

Graph on Millennial wealth transfer from Cowen October 14 research note

Many of the stocks listed are growth stocks, aligning with current environment where investors are preferring  growth stocks over value stocks.

“The ‘growth’ vs. ‘value’ continues to skew stock performance in favor of TAM and digital growth narratives in Consumer,” Kernan said.

Eight Key Themes

These are the eight key themes on consumer behavior that came out of the annual survey.

Sustainability & Social Impact

Sustainability and social impact are playing an important role in young consumers’ decisions — 74% of respondents said sustainability or social impact was either “very important” or “somewhat important”.

“Gen Z and millennials view a brand’s social impact and sustainability [initiatives] as more important than older demographics which, on average, registered at 53% within the survey,” Kernan said “Initiatives to promote sustainability will benefit those with scale in the supply chain to offset costs.”

Resale Capabilities

Growth in purchasing on leading resale platforms grew 36% year-over-year, according to the report. Analysts identified that consumers attitudes toward second hand items and secondary markets had turned favorable. The themes underpinning this change were digital communities, data analytics, product scarcity and network effects.

“The network effects of each marketplace are significant with data, and more users/community participating in the market creating more trading, more hype/storytelling around product launches and enabling brands to create customized, limited-edition product at premium prices and high sell-throughs,” Kernan said. “This ultimately can circle back and help to drive primary market sell through for brands depending upon brand heat in the secondary market. The growth of the market generates value-creating opportunities for brands able to participate.”

Path to purchase

Amazon is playing a significant role in the path for young consumers to find, research and buy products.

“AMZN has emerged as the most important resource along a consumer’s journey from initial search, to product research, to completing a purchase for every age cohort under 55,” Kernan said.

Social Commerce

Graph on purchase behaviors through social media from Cowen October 14 note

Each year, social media continues to play an even bigger role in society’s habits, Cowen’s analysts see social media becoming a key way for consumers to find products and engage with brands. They expect the trend toward social commerce to lead to “lower growth for consensus models and potentially lower valuation models for vendors with mall based and outlet retail exposure”.

“The affinity for Amazon among these consumers suggests that sustained eCommerce growth at Amazon should be sustainable,” Cowen internet equity analyst, John Blackledge, said. “It also shows that social commerce is a trend that is here to stay and that it can benefit both new and existing brands. While it is still early, Instagram and Pinterest appear well positioned to capitalize on this shift to social commerce and any platform that successfully does so should drive meaningful value creation in our view.”


Brands continue to dominate, according to the report, particularly those focused on the mix between casual and lifestyle. Companies like Nike, Adidas and Lululemon with strong brand affinity are best positioned to capitalize on this.

“Retailers and brands in the mid-tier mall and department store based fashion may continue to lose share, while value driven retail and innovation/aspiration retailers and brands should continue to win,” Kernan said “This has manifested itself in a barbell strategy towards sector positioning – own Athletic, Off-Price, luxury and broadlines.”

Digital Economics

Brands with an existing strong digital platform will have the ability to earn a meaningful higher gross profit margin because they are now able to recognize full retail price relative wholesale price, Kernan said.

“Many sneaker and apparel brands, along with retailers, with well-established digital platforms have been posting outsized e-commerce gains in the 1H of 2020 through present,” Kernan said.


Graph of living habits from Cowen October 14 research report

According to the survey, 29.7% of respondents in the 18-24 age group owned their own living space, compared to 19.3% in 2019. There was also a decrease in those within the age group living in rented spaces, however, because the survey took place in June, when COVID-19 restrictions were still in place, suburbanization habits may be affected. Cowen is still expecting companies serving suburban areas could benefit from this change in living habits.

“We are seeing a recent distinct trend of an exodus out of urban areas into suburban areas within the U.S., particularly among millennials. It remains to be seen if this recent shift is near-term and tied to the pandemic or a longer-term trend,” Kernan said.

Food Transparency

Similar to sustainability, young consumers, based on the survey, want more transparency over where their food comes from. Companies making strides in this space will be distinctly advantaged.

“62.1% of Consumers aged 18-34 view food transparency as ‘Important’ or ‘Very Important’ in making a restaurant decision, 4.1% above consumers aged 35 +,” Kernan said.

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