While the past several years have focused on the whims and desires of millennials, it’s time to shift this paradigm by focusing largely on Gen Z growth stocks. To be sure, millennials have aged into a sweet spot where their desires wants have married into higher purchasing power. That said, future generations will look more like the “zoomers” than any other age cohorts.
Fundamentally, you must consider that Gen Z represents the first demographic category that practically has no knowledge of the analog paradigm. That fact immediately separates the youngest adult demo from older millennials, who will remember the dial-up internet days. Instead, zoomers have instead entered a world of convenience and dare I say immediate gratification. So, that will likely influence so-called Gen Z stock picks.
Further, the growth stocks for Gen Z will almost certainly focus heavily on brands with which young consumers are familiar. If you’re thinking like a zoomer, you might want to set aside boomer narratives like valuations and what not. This is about anticipating the future in a burgeoning arena, not about finding discounts based on historical trends.
If you’re ready to enter this brave new world, then take a look at these Gen Z growth stocks.
Netflix (NFLX)
What it is: Billed as a subscription video on-demand company, Netflix (NASDAQ:NFLX) is best known for its streaming services. Over the years, the company has transitioned from delivering entertainment content in a convenient platform to producing it with groundbreaking original material.
Relevance: According to a Piper Sandler survey focused on teenagers, this age cohort spent 28.7% of their daily video consumption on Netflix. Therefore, NVDA makes a great case for Gen Z growth stocks based on utilization and familiarity. Further, another survey shows that 75% of Netflix users in the U.S. are between 18 and 34 years old. That makes for a huge addressable market that should benefit NFLX.
Pros: If you’re seeking Gen Z stock picks, it’s difficult to pass up NFLX. Financially, the company still prints a three-year revenue growth rate of 16.2%, beating out 84% of its peers. It’s also consistently profitable, something that shouldn’t go away due to young people’s continued support.
Cons: NFLX isn’t the cheapest idea among growth stocks for Gen Z, which trades at 64.4X trailing-year earnings.
Nvidia (NVDA)
What it is: A multinational technology firm, that description doesn’t do any justice to Nvidia (NASDAQ:NVDA). Thanks to its advanced graphics processing units (GPUs), the company undergirds myriad innovations. Primarily, we’re talking about video games. Lately, though, the semiconductors bolster generative artificial intelligence.
Relevance: Almost surely, the generative AI component alone should make NVDA one of the top Gen Z growth stocks. In 2022, this arena reached a valuation of $29 billion. However, experts project that by 2030, the segment could hit $667.96 billion. Further, additional relevance stems from the gaming market. Per Piper Sandler, video games represented 11% of male teen wallet share.
Pros: For Gen Z stock picks, it’s almost criminal to not at least cast a glance at Nvidia. Currently, the company sports a three-year revenue growth rate of 34.5%, beating 87% of its rivals. It also enjoys excellent margins across the board.
Cons: For an “ok boomer” moment, you’re going to have to point to its earnings multiple of 64.4X. Also, NVDA trades at a seemingly ridiculous 27.13X trailing-year revenue.
Coinbase (COIN)
What it is: A cryptocurrency exchange platform and wallet service, Coinbase (NASDAQ:COIN) ranks among the top Gen Z growth stocks. It’s also one of the most controversial thanks to its obvious ties to the blockchain ecosystem. Unsurprisingly, it caught the ire of the U.S. Securities and Exchange Commission (SEC), setting up perhaps the ultimate zoomer-versus-boomer showdown.
Relevance: Frankly, the relevance of COIN as one of the elite Gen Z stock picks speaks for itself. Crypto is a young person’s investment class of choice. Of course, nothing prevents older people from joining in on the fun. According to one survey, nearly 94% of crypto buyers hailed from the age range of 18 to 40 years.
Pros: Financially, COIN epitomizes the case for growth stocks for Gen Z with its top-line performance. Specifically, its three-year revenue growth rate clocks in at 76.9%, beating out 92% of rivals. Also, with Coinbase expanding into other nations, its larger footprint may help mitigate its financial choppiness.
Cons: If you’re a traditionalist, you’re going to have to overlook its high valuations.
On the date of publication, Josh Enomoto 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.
