Millennials are just like every other generation: They eventually want to retire. And just like everyone else, they'll need focus, discipline, and savvy stock-picking to meet that goal. For millennials looking to pick up shares in a company that can help them toward retirement, see what our Foolish investors have to say about Anheuser-Busch InBev (BUD 0.08%), EPR Properties (EPR 0.25%), and Manhattan Associates (MANH -1.96%).
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Brewing up long-term profits for millennials
Sean O'Reilly (AB InBev): To reach their retirement goals, millennials have to do what generations before them have done: Live below their means, invest for the long term, and focus on quality companies. One such quality name is Anheuser-Busch InBev, with its portfolio of over 200 beers.
AB InBev is the product of a string of mergers that culminated in October 2016, when the company completed its merger with brewing giant SAB Miller. The $100 billion deal solidified AB InBev's status as the world's dominant brewer. According to Euromonitor, it holds a 28% market share of all beer sales globally. But that's just part of the story, as it also holds a dominant share in dozens of countries, including Brazil, South Africa, and Mexico. Even in the U.S., it has a 45% market share.
Revenue grew 5% year over year in Q2 2017, while total volumes increased just 1%, proof that the company has pricing power. And the company is benefiting not only from demand for its beer but also from operational improvements, as cost savings from the SAB Miller acquisition are coming in above initial estimates. Finally, EBITDA for the three months ended June 30, 2017, leaped 11.8% and helped profits rise to $1.87 billion.
AB InBev has a strong foothold in an industry that millennials hold close to their hearts. With a 3% dividend yield to top it off, AB InBev is a stock sure to reward millennials for decades to come.
Millennials value experiences over ownership
Matt Frankel (EPR Properties): As the millennial generation starts to reach its peak earning years, the evidence is showing that this demographic prefers spending its money on experiences, rather than on buying things. One excellent way for millennials to invest in their own generation's spending preferences is with real estate investment trust EPR Properties.
As of the latest quarter, EPR owns 378 properties in three main segments -- entertainment, recreation, and education. The entertainment properties make up 43% of total net operating income and primarily consist of megaplex theaters. Recreation properties, such as golf complexes (Topgolf is one of EPR's major tenants), ski parks, and water parks make up another 32%, and education properties such as charter schools, private schools, and early childhood education centers make up 22%.
The portfolio has grown rapidly in recent years, particularly the recreation and entertainment segments. In fact, the company has invested $3.1 billion in properties in just the past five years.
EPR Properties pays a 5.9% dividend yield, which is well covered by the company's funds from operations, the REIT version of earnings. The combination of this high level of income and the growth that can result from the increase in value of the company's property portfolio can produce excellent returns over time. It could also help millennials achieve their investing goals.
A stealth e-commerce play
Brian Feroldi (Manhattan Associates): Millennials have grown up accustomed to shopping for stuff online, and that's a trend I don't see reversing itself anytime soon. However, it's a huge logistical challenge for retailers to provide consumers with an on-demand, omnichannel shopping experience. That's why many of them turn to Manhattan Associates for help.
Manhattan Associates offers a specialized software platform that thousands of retailers, wholesalers, and governments use to manage all of their behind-the-scenes logistics. The company's platform helps with things like ordering, inventory management, tracking, shipping, analysis, and more. Giving the complexities of managing a multi-channel distribution network, perhaps it's no surprise to see that business has been booming for decades.
MANH Revenue (TTM) data by YCharts
The company's long-term growth has translated into huge gains for long-term investors, but the recent retail funk has caused Manhattan's growth rate to slow. As a result, shares have pulled back sharply from their all-time highs, which has the stock trading at a tempting valuation. The stock is currently trading around 25 times next year's earnings estimates. I'd argue that's a great entry price for a business that cranks out profits and has a strong tailwind.
