When it comes to winning in the stock market, we’ve found that a particular tried-and-true process yields the strongest results:
- Identify unstoppable investment megatrends that will redefine how the world works.
- Within those megatrends, find the most relentlessly innovative companies that will dominate at scale.
- Of those innovative leaders, identify those with the most hyperscalable business models.
In other words, find a pervasive trend that will change the way people and businesses spend their time and money. Pinpoint the most well-positioned companies helping to drive that trend, and buy those stocks.
That strategy has worked exceptionally well for the AI megatrend that has swept the globe over the past two years. Indeed, the leading firms in the space – companies like Nvidia (NVDA) and Palantir (PLTR) – have seen their stocks soar almost 1,000% since late 2022.
Of course, I expect this AI megatrend will continue with vigor in 2025. That means top AI stocks should keep on rallying.
But to maximize your profit potential, diversity is key. That’s why I remain on the hunt for emerging new megatrends. And I think I may have found a lesser-known yet powerful social trend that could produce some huge stock winners this year: sober living.
The Not-So-Hidden Dangers of Alcohol Consumption
You’ve probably heard about how the U.S. Surgeon General, Vivek Murthy, recently issued a warning about the health dangers of alcohol. He said that research supports the idea that regular alcohol consumption is linked to cancer.
Essentially, it seems that if you drink often, you’re at higher risk of developing cancer. As such, Murthy is pushing for cancer warnings on all alcoholic beverages in the U.S.
But in the bigger picture, the Surgeon General is trying to communicate that America may need to rethink its relationship with alcohol.
Drinking alcohol is a large part of American culture. Many folks have a glass or two of wine at dinner, mimosas at brunch (especially if they’re ‘bottomless’), or a few cocktails at a bar after work. It’s very normal to drink beer at ball games and sip champagne on New Year’s Eve.
Indeed, alcohol is everywhere. According to data from the National Institute on Alcohol Abuse and Alcoholism, Americans drink about 600 alcoholic drinks per year, on average. That’s more than one a day.
I think that number is about to drop like a rock. Not because of the Surgeon General’s warning – though, that’ll help; sure.
But the social trend away from alcohol and toward sober living began long before that.
Sober Living Is Longstanding
Some may call it a “young people thing.” But according to Gallup, only 62% of adults under the age of 35 drink alcohol – down from 72% two decades ago.
I’ve noticed it in my own friend group. My Millennial and Gen Z friends have increasingly become more focused on their health. It generally started with an obsession about short-term goals – going to the gym to gain muscle or lose weight. But this has morphed into a more ‘holistic’ approach centered on long-term health, too – doing the right things today to improve wellness and longevity.
This includes eating good foods, getting regular cardio, focusing on healthy sleeping habits, finding the right work-life balance, having positive social interactions – and, yes, reducing drinking.
For example, a few of my friends are doing “Dry January,” wherein you abstain from drinking alcohol for the entire month. It has become a common New Year’s resolution that a lot of people try every year.
But it seems more people are attempting it now than ever before. In fact, this past week, Google Search interest in “Dry January” spiked to all-time highs.
And it has been on a general upswing since 2015.
Now, does this mean drinking will altogether die over the next few decades?
We don’t think so. Drinking will likely forever remain a part of American society.
But this major social trend – wherein younger consumers are increasingly changing their lifestyles to maximize their personal health – does mean alcohol consumption in the U.S. will decline over the coming years.
That means less dollars spent on booze – and more dollars spent on other things.
The Final Word on Sober Living
Those “other things” could prove to be great investments. Indeed, some already are.
Just look at the restaurant sector. Traditional fast-food heavyweights like McDonald’s (MCD) and Yum (YUM) – the parent company of KFC and Taco Bell – have struggled for a while now. MCD stock is up just 9% since late 2022, while YUM stock is up a meager 1%.Meanwhile, healthier fast-food chains like CAVA (CAVA) and Sweetgreen (SG) have stolen the show. SG stock is up more than 250% since late 2022, while CAVA has surged more than 400% higher since its IPO in summer 2023.
As people drink less and embrace healthier habits, we will see “healthy” stocks in other sectors breakout just like CAVA and SG.
For example, gym stocks should benefit from this trend. Life Time Health (LTH) and Planet Fitness (PLNT) look like natural beneficiaries.
And as people go to the gym more, they’ll probably also buy more gym and athleisure clothing. Lululelmon (LULU) and Nike (NKE) should be winners in that space. Or for those looking for an earlier stage investment in athletic apparel, consider rising footwear maker On Holdings (ONON).
How about outdoor apparel? If people put down the booze, they may hike more, or even pick up new hobbies like rock climbing. Deckers Brands (DECK) could win big as a result.
The derivative impacts of a culture that spends less money on alcohol and more money on other things are huge and widespread.
I could continue – but in the interest of time, I’ll leave you with this.
Perhaps the best way to find winning stocks on Wall Street is to uncover the companies at the epicenter of major social, economic, or technological trends.
Right now, AI is the biggest technological trend on our radar. But the rise of the sober-curious lifestyle could easily become a major social trend that produces some huge stock winners in 2025 as well. And we’ll be on the lookout for emerging champions to invest in.
Of course, we also remain hyperfocused on AI, too.
To help us find some of the best AI stocks to buy for the new year, we’re looking toward the world’s richest man – Elon Musk – and his AI venture for guidance.
Learn more about xAI now to get your portfolio ready for the months to come.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.
