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Taking Advantage of Increased Leisure Time
We need to differentiate between the various baby-boomer generation groups that are able to partake in enhanced leisure time. There is a shrinking minority with both time and money (and hopefully health), and then there are a bevy of other baby-boom demographics. The latter groups encompass those with: (a) time, but minimal income (generally those with a small pension and/or modest savings); (b) The sector with a moderate amount of time and money (e.g. part-time retirees); (c) Those forced into early retirement due to layoffs or other cutbacks; (d) people who are working part time, but are still looking for full-time employment. Many older boomers are foregoing retirement because their nest eggs have been eviscerated by the financial crisis and the subsequent recession. And with the general health of this demographic group improving, many are concerned that their savings will expire before they do. These older boomers intend to hang onto their jobs for as long as possible, but at the same time, they are trying to indulge in those activities that they were dreaming of doing in a conventional retirement scenario. This group may also have post-college age children living at home, with whom they may participate in hobbies and activities.
The demographic with time and money are able to take cruises, skiing vacations, and other travel, buy motor homes, powerboats, yachts, and vacation homes. Some companies that are benefitting from this demographic are Harley Davidson (HOG), Brunswick Corp. (BC), Carnival Corp. (CCL), Callaway Golf (ELY), and Polaris Inds. (PII).
The larger segment of the baby-boomer generation, (e.g., those with varying amounts of time and income) have tended to become more introspective in the aftermath of such events as 9/11, the recent banking crisis (which led to the recession), and the lingering wars in Afghanistan and Iraq. They have tended to become less materialistic, souring on the idea of finding happiness though possessions, and have turned toward family, friends, and community. They are indulging in more spiritual, creative, holistic, and active pursuits. There appears to be a greater interest in self improvement and creativity. Boomers are looking back to the things they enjoyed as children or as young adults, such as arts and crafts, strumming a guitar, reading (particularly books on spiritualism, historical fantasy, and self improvement), renovating old cars, gardening and growing their own vegetables. There is also the ongoing movement toward maintaining health through a more active lifestyle. Sporting events are catering to increasingly older age categories, particularly in the fields of triathlons, tennis, running and many other events that require skill and stamina rather than speed and strength. In particular, hiking, kayaking, and cycling (partially due to the success of Lance Armstrong), have become increasingly popular with the older generation over the past decade.
Companies that are capitalizing upon, or are expected to benefit from the aforementioned activities are Amazon (AMZN), Barnes & Noble (BKS), Home Depot (HD), which boasts a decent dividend yield, Nike Inc. (NKE), Huffy Corp., and Dick’s Sporting Goods (DKS).
Three other companies that should prosper are Sherwin-Williams (SHW), Costco (COST), and Lowes (LOW). Many people who either cannot or are unwilling to sell their homes at rock bottom prices are deciding to stay put and modernize, expand, or improve their dwellings. Returning post-college age children may spark the need for home extensions. And rather than hire expensive contractors to do the renovations, babyboomers are thinking that with more free time they can do the jobs themselves with materials and guidance from the aforementioned DIY chain stores.
Gambling can be another relatively cheap form of escapist entertainment in tough economic times. Companies that continue to benefit from this activity are Las Vegas Sands Corp. (LVS), Bally Tech., Inc., (BYI), Boyd Gaming (BYD), and MGM Mirage (MGM).
Lastly, there appears to be no end to the public’s insatiable desire for electronic entertainment. Personal hand-held entertainment devices continue to gain favor, particularly among younger demographics worldwide. Demand for Electronic gaming devices, blackberries, i-pads, and i-pods remain strong. Companies that should continue to gain from this trend are Viacom (VIA/B), Apple (AAPL), Verizon (VZ), and Microsoft (MSFT).