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Starbucks and Facebook benefit as Millennials come of age

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Written by: Paloma Kubiak
18/01/2016
As Millennials – those born after 1980 – begin to reach their prime working and spending years, Starbucks and Facebook are two stocks to consider for long-term investment opportunities.

Killik & Co, an advisory stockbroker, says Millennials will have a significant impact on many businesses simply because they account for around a quarter of the population in the US and Europe.

According to the firm, brand loyalty for this generation is much more led by price than quality, and a company’s use of social media is twice as important to them compared to other generations.

As a result of the trends, Killik & Co thinks two stocks in particular, Starbucks and Facebook, will benefit from the needs, expectations and culture of this generation.

Facebook

As millennials consume more media via the internet, the stockbroker says Facebook, with its 1.5 billion monthly users, offers a leading platform for advertisers to reach this audience. The site and app capture 22% of all time spent on the internet and Facebook can utilise its extensive user data to build sophisticated personalised ad campaigns. Killik adds that combined with recent high profile mobile acquisitions such as Instagram and WhatsApp, Facebook is well placed to capture significant portions of the fast-growing digital advertising market.

Starbucks

Starbucks is located in 65 countries and operates through company owned stores, as well as licensed stores. It also sells its coffee and tea products through channels such as grocery stores and national foodservice accounts. Killik believes it offers significant earnings growth potential, with multiple drivers of growth. In the US, there are still opportunities to expand store numbers with more convenience formats and internationally, there remains significant store expansion potential – Starbucks is looking to open 2,500 stores in China in the next five years. Killik adds that the company can drive annual revenue growth over 10% and annual earnings growth of 15%-20% over the medium term.

 

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