Take it from a teenager: There are certain trends people think we like, and there are the trends in which we actually participate. If you're able to capture each theme's essence, finding companies like the ones suggested below and profiting should be a cakewalk. Without further ado, the three trendiest themes are (1) Natural and Organic Foods; (2) Innovative Products and Companies; (3) Well Priced and Good Food, to be distinguished from the first trend by the end of the article.
Natural and Organic Foods: Play it Outright: WhiteWave Foods (NYSE:WWAV), Hain Celestial (NASDAQ:HAIN) Play it Safe: Kroger (NYSE:KR), Whole Foods (NASDAQ:WFM) If you haven't noticed it already, the natural and organic food craze has become one of the most lucrative trends in the market. My friends and myself alike are beginning to acknowledge what is in the foods we eat, and many have turned vegetarian or vegan in the process. WhiteWave and Hain Celestial are two fantastic ways to play the transition from pantry favorites like Oreos and Lay's Potato Chips to Horizon milk and The Greek Gods yogurt. The former has immense growth and recently acquired Vega, a half a billion dollar company that makes plant-based protein powder. WhiteWave Foods is the industry leader in plant-based foods, and this acquisition only cements their standing. As I have said many times before, I would buy this name on any weakness. As for Hain Celestial, we need to discount the phrase "if you're not first, you're last." Just because, in my opinion, WhiteWave is number 1 in the space doesn't mean that Hain Celestial is chopped liver. In fact, it couldn't be farther from it, seeing as the company is the maker of the aforementioned Greek Gods yogurt, Terra Chips, Celestial Seasonings and Sensible Portions, just to name a few. I predict that in the coming years these brands will become increasingly common in the pantries of homes and college dorms alike. As teenagers try these foods and realize that they don't have to sacrifice taste for authenticity, they will demand a care-package that contains some Terra Chips or Celestial teas, and not a bag of Lay's or Swiss Miss hot chocolate packets. If you don't want to play the theme directly, I would suggest buying either Kroger (which, like usual, reported an amazing quarter) or Whole Foods. The main difference between the two is that Kroger could not be more perfect, and Whole Foods has been down on their luck, to put it nicely, after some subpar earnings reports. Kroger seems to be in a catch-22 right now because with a series of incredible earnings, many believe that the company's valuation is stretched. If you're an investor who likes companies that are consistent as can be, I'd suggest Kroger. However, if you're the type to favor stocks that have been beat up, go with Whole Foods. Both sport a decent dividend and are increasingly aware of the natural and organic trend. They each sell WhiteWave and Hain Celestial's products, and also an innumerable amount of other n&o foods. Buying either would be a more diversified way to play the theme. Innovative Products and Companies: Play it Outright: Under Armour (NYSE:UA), Domino's (NYSE:DPZ), Sketchers (NYSE:SKX), Facebook (NASDAQ:FB) Play it Safe: Colgate-Palmolive (NYSE:CL), Unilever (UN, UL), Procter and Gamble (NYSE:PG) My friends and I go gaga over cool products and love the companies that make them. I use my interactions with my friends as a vehicle to spot trends in the market; the very trends that I am writing about right now. Under Armour and Facebook are two of many companies that make innovative products. Of course, "innovative" and "cool" are relative, though I think that many will agree that these two companies' products are deserving of the adjectives. For starters, Under Armour has a line of clothing designed specially for athletes who are trying to stay warm or cold. Called Heat Gear and Cold Gear, the long and short sleeve shirts are clothing that my friends and I train with. The reason why we love the clothes so much is because they actually do what they're advertised to do! Consumers falling in love with the clothing has a domino effect, making them associate with the brand and become eager to see what else the company can come up with. Speaking of dominoes, the pizza chain never fails to amaze the youth. I speak for the masses when I say that no teenager likes talking on the phone, and Domino's capitalized on this reality. Using the company's app, pizza-lovers can simply select which foods they'd like, input the address, add any notes and within the hour their order reaches their door. They can even pay for the order right as they're placing it. We love this type of stuff, which is why Domino's stock chart looks as delicious as its food tastes! Like Under Armour, Sketchers is a company that has a strong focus on innovative products. The company's two CEOs constantly talk about upcoming designs and shoe-types, and are expanding well beyond the Sketchers Shape-Up shoe. This shoe was the company's product that officially removed its branding of a "dad-shoe-company." Again, its ability to produce "cool" shoes has produced a stock chart that is nothing short of incredible. Lastly, Facebook is a company that many see as outdated. This notion could not be farther from the truth. While teenagers might not be thrilled that more and more parents are coming to the site, we still like what the company has to offer. It is much more than Zuckerberg's original product; now, Facebook is a company that owns Instagram, WhatsApp and Oculus (to name three of about 50). This growth hound knows what consumers will like in the future, which is precisely why the company bought the virtual reality company Oculus for 2 billion dollars. If the aforementioned stocks seem too risky for your taste, perhaps you should take a look at one of the three major consumer staple companies: Colgate-Palmolive, Unilever and Procter and Gamble. Colgate-Palmolive is known for dominating the tooth-care aisle, bombarding shoppers with an overwhelming number of toothpastes and brushes. It, like the other two companies, produces and distributes dozens of products and has exposure all over the world, which makes all three a safer bet. And, just because they're safer bets doesn't mean that they're boring. Colgate-Palmolive makes an extremely innovative electric toothbrush that you shouldn't knock until you try it. Unilver and P&G are the creators of the ever-popular Axe and Old Spice brands, respectively. There is always room for innovation when it comes to consumer products - all it takes is for one company to up the ante on, for example, their hair gel products, promising that even the most violent gust of wind won't misplace one hair. Now that is a product everyone would buy! Well Priced and Good Food: Play it Outright: Dunkin Donuts (NASDAQ:DNKN), Chipotle (NYSE:CMG) Play it Safe: PowerShares Dynamic Food and Beverage ETF (NYSEARCA:PBJ), PowerShares Dynamic Leisure & Entertainment (NYSEARCA:PEJ), Dave and Buster's (NASDAQ:PLAY) One thing that everyone knows is that teenagers love to eat. A lot. I find that my friends and I have a hard time saying no to a $10 Chipotle burrito bowl (with chips, of course) or a $4 Dunkin Donuts medium iced coffee. We just like good food. Even though earlier I touched upon the fact that many of my friends and I are beginning to acknowledge what's in the foods we eat, it would be misleading to say that we always choose the option that is the most naturally friendly or organic. Just as a bodybuilder has his cheat day, my friends and I devour the Mexican and java delicacies alike, without thinking twice. I'll reiterate the reason: because they taste good and are well priced. Just because this trend may not be the newest or most under-the-radar, it is still relevant as can be - so why not profit from it? My alternative choices to those who do not like to buy single stocks or want a more diverse way to play the sector are PBJ, PEJ and PLAY. The first two are ETFs, offering a blend of numerous restaurant companies, such as Darden Restaurants (which owns Olive Garden, Longhorn Steakhouse and more) and Yum! Brands (the parent company of KFC and Taco Bell, to name a few). So, what you get with these ETFs is a way to cover all the bases. That way, when one company is in the news for the wrong reason, your portfolio won't crumble along side it. Besides ETFs, one of the only other ways to play the theme of good food and good prices is through Dave and Buster's. This chain not only offers value pricing on dinner, but also has an adult arcade at each location. The latter is how PLAY got its ticker symbol and, more importantly, how it doesn't put all of its eggs in one basket. Dave and Buster's was the restaurant stock to be in when oil crashed, because the money being saved at the pump wasn't going toward 5 star dinners; instead, it was being put toward cheap games of Skee-Ball and Pac-Man. Dave and Buster's business model is extremely lucrative. In a matter of weeks the arcade machines pay for themselves, and the tickets and prizes are dirt cheap. For all intents and purposes, this means that once a machine has paid for itself, the rest is profit. And let's be honest, how can you not play the game that has been staring you in the face all throughout dinner? I would certainly consider this company if you're not fond of buying a company that deals exclusively in the restaurant sector. Conclusion Investing in themes that teenagers actually like is vital to ensuring your portfolio's freshness and security for years to come. If I had to choose just one theme to buy in to, I'd pick the natural and organic one. Though this trend is one that has been picking up steam, I believe it's still in its early innings. While all three trends are very sticky, I think that the n&o play is certainly the stickiest. If a teen begins eating naturally and/or organically, odds are that this eating habit will follow them for a good portion of their life, and will often be passed down to their children. As with all the themes, what you're buying in to is not only today's habits, but the habits of tomorrow.
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