The Baby Boomer generation remains an economic force, especially considering its influence on Baby Boomer stocks. While many are now in retirement, this generation continues to spend its money and influence the decisions of small and large companies.
A Bank of America study released last fall found that throughout the Baby Boomer generation’s adulthood, U.S. households grew their net worth from $17 trillion in 1980 to $150 trillion today. Baby Boomers account for 40% of all U.S. consumption, the biggest share of any group. The Baby Boom generation was also the only one to increase their spending in 2023 as interest rates marched higher. With the boomers continuing to drive the U.S. economy forward, we look at three Baby Boomer stocks to buy for a booming market.
Royal Caribbean (RCL)
Cruise lines have come roaring back from the depths of the COVID-19 pandemic, helped in large part by bookings on the part of baby boomers. Royal Caribbean (NYSE:RCL) has been a major beneficiary of the recovery. Cruise line bookings look particularly strong in 2024, with cruise operators reporting record bookings heading into the year as travel demand accelerates. According to data from the Cruise Lines International Association (CLIA), a record 35.7 million people are expected to cruise in 2024.
During an earnings call last October, Royal Caribbean executives said they saw record bookings for the year ahead as travel demand accelerates. Royal Caribbean executives said that two-thirds of its customers are taking a cruise for the first time and that its repeat bookings have doubled heading into 2024. Demand is so great that capacity is becoming an issue, with many of Royal Caribbean’s cruise ships booked solidly for the coming 12 months.
RCL stock has gained 115% in the last 12 months and was a top performer in the S&P 500 index in 2023.
Darden Restaurants (DRI)
Baby boomers tend to have disposable income in retirement and like eating out. However, many prefer restaurants that are a bit fancier than your typical quick-service joint. Sit-down restaurants with table service and a licensed bar, such as those operated by Darden Restaurants (NYSE:DRI), are popular with boomers. Darden’s restaurant chains include the Olive Garden, LongHorn Steakhouse and Ruth’s Chris Steak House.
Like cruise lines, restaurants have staged a strong comeback since the pandemic. Darden Restaurants recently reported exceptional quarterly financial results that beat Wall Street estimates as patrons return to its branded chains in droves. The company also raised its forward guidance. For Q3 2023, Darden reported earnings per share (EPS) of $1.84 versus the expected $1.74. Revenue came in at $2.73 billion, which aligned with analysts’ forecasts. Darden’s sales were up 9.7% from a year earlier as its various restaurants fired on all cylinders again.
DRI stock has gained 10% in the last 12 months, trades at 19 times 2024 earnings estimates, and offers a quarterly dividend payment of $1.31 per share, giving it a strong yield of 3.24%.
Procter & Gamble (PG)
Consumer products company Procter & Gamble (NYSE:PG) sells many items that Baby Boomers rely on as they age, including Metamucil fiber supplement, Vicks vapor rub and Pepto-Bismol. The company also makes dental floss, mouth wash and soap. While these items sell well among all consumers, many products skew toward older shoppers. This helps to account for Procter & Gamble’s resilient sales.
Procter & Gamble’s most recent financial results beat Wall Street forecasts on both the top and bottom lines, with EPS of $1.83 versus $1.72, which had been expected. Revenue totaled $21.87 billion compared to $21.58 billion that had been forecast. Sales were up 6% year-over-year. The company said that its sales during Q3 2023 got a boost from a 7% price increase. Procter & Gamble forecast its full-year 2023 revenue to grow about 4% and still expects EPS of $6.25 to $6.43 a share.
PG stock has slipped 2% over the last 12 months but has still been up 62% over the past five years.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
