Call it a silver tsunami. Some 10,000 Americans turn 65 every day, according to Andy Miller, a senior vice president with the American Association of Retired People (AARP). That makes them the country’s fastest-growing age group. What’s more, people over 50 account for just under $10 trillion in economic activity annually—nearly half of the nation’s GDP.
In other words, this growing cohort is awash in disposable income and they’re spending it. They’re buying gadgets that help them remain in their homes. Alternatively, they’re moving into retirement communities. They’re scooping up tech that keeps them connected to their caregivers, and they’re purchasing cosmetics to age gracefully.
The upshot: There’s a huge market in goods and services for those in or entering this demographic, and businesses are responding with products and innovations to meet the demand. From an investment standpoint, that’s sparking a real opportunity.
Here’s a tiny sampling of some companies surfing the waves of the silver tsunami:
Making homes smart
Past research shows that some 87 percent of people over 65 want to age in place. Companies that make WiFi hubs for controlling lights, ovens, thermostats, security systems and so on are helping make this possible by easing their minds. The question: When the dust settles, which firms that makes these products and services will come out on top?
If you want to go the blue-chip route, the heavyweights in home hub tech like Amazon (AMZN), Apple (AAPL) and Alphabet’s Google (GOOGL) are pretty safe bets. But to remain competitive, they’ll have to keep innovating in this arena and they may find themselves prioritizing other initiatives (like cloud computing services or phones).
That’s why another firm, NRG Energy (NRG), merits investors’ attention. While not a household name, it has real heft. It recently acquired Vivint, a keenly focused smart home company with a stellar stock performance and a customer base of around two million people in North America.
Providing companionship
Robots that offer friendship to ease seniors’ loneliness are gaining traction, but only a handful of the businesses building them are ready for prime time.
The trick is to place your money in public companies that have vetted the start-ups for you. One example: the companion robot ElliQ, created by the private firm Intuition Robotics, is now being tested in long-term care homes. Intuition has received financial support for ElliQ from big names like Samsung (SSNLF), Toyota (TM) and iRobot Corp. (IRBT), maker of the self-operating vacuum Roomba.
iRobot is also putting funds into Labrador Systems, a closely held firm that has created another well-received companion robot. Their own stocks should benefit considerably as the start-ups they’re betting on take off.
Creating the hospital to go
Hospital care in the comfort of home is a growth industry—and tech retailer Best Buy (BBY) is tapping into it. The firm’s stock performed sluggishly in the first quarter of ’23 likely due to dropping PC sales and inflation, but this new initiative sounds promising. The company has hooked up with Atrium Health, a Charlotte, NC not-for-profit that provides hospital services in a home setting.
The deal links Atrium’s programs and caregivers with Best Buy’s wearable technology. Best Buy’s Geek Squad installs and services devices that remotely monitor a patient’s vital signs, relaying the information to an Atrium team 24/7.
Offering a home away from home
Some people 50-plus like the notion of a full-service live-in center. Others, including those suffering from advanced dementia, require it. And the range in between is wide. Regardless, expect a growth spurt in senior housing and a burgeoning number of investment options to go along with it.
If you want to associate your investment with top-quality care, Welltower (WELL) could be a solid choice since Fortune named it one of the World’s Most Admired Companies in 2019. Some analysts say the firm is on track to grow steadily over the next few years.
The same can be said of The Ensign Group (ENSG), which operates over 250 facilities for those in need of rehabilitative services. Right now, the company’s stock is trading at what many believe is its fair value, but demographics are working in the firm’s favor and its prospects over the long term appear sound.
Enhancing life
Products that boost the self-image of seniors are doing exceptionally well, as are some of the enterprises that make these goods. The proof: The market size for anti-aging cosmetics and treatments is expected to increase by $18.96 billion between now and 2027.
That makes stocks in companies like Estee Lauder (EL), which executives say will expand operating margins by 0.5 percent annually, especially attractive. Another business in the field to follow is privately-held Galderma, which is poised to launch an IPO in the near future, according to Reuters.
If you’re sensing a theme, you’re onto something. Investing in goods and services for an aging population is a trend worth hitching on to, because the line on that graph is going straight up. Just watch.
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