They spend all their money on smashed avocado, holidays, and having fun rather than starting a family. These are just some of the criticisms leveled at millennials – a cohort born between 1981 and 1996, representing roughly 25% of the total population in the United States.
These assertions may be somewhat unwarranted when taking into consideration millennials' desire to pursue a career, pay back student debt, and navigate the rising costs of homeownership. Moreover, despite data showing that births have declined in nine out of the past ten years to hit a 32-year low in 2018, babies born to women aged 35 to 39 actually edged up by 0.9% per year, according to Bank of America research cited by Barron's. This indicates that millennials are having babies, albeit at a later stage in life than their parents and grandparents.
In another sign that the nation is not facing an American-made baby drought, the decline in births eased between 2017 and 2018, slowing to 1.7% from 2.3%. Furthermore, market research firm Euromonitor forecasts that the figure will slow to a 0.2% decline by 2021, per the same Barron's story. Given this generation's size and considering that the average age of a millennial is around 30, more births in the near future look likely.
Those who want to capitalize on a millennial-fueled baby boom should consider trading these three stocks of companies providing products and services that enhance the lives of both babies and new parents. Let's look at each company in more detail and use technical analysis to locate trading opportunities.
Carter's, Inc. (CRI)
With a market capitalization of $4.16 billion, Carter's, Inc. (CRI) markets branded childrenswear through branded retail stores, department stores, company websites, and wholesale locations. Some of the children apparel firm's better-known brands include Carter's, OshKosh, and Precious Baby. Bank of America recently reiterated its buy rating on the stock, noting favorable Labor Day sales, the opportunity for increased market share after competitor Gymboree's bankruptcy, and a millennial-driven baby boom. Carter's stock trades at about 14 times forward earnings, offers a 2.12% dividend yield, and has returned 17.19% year to date (YTD) as of Oct. 15, 2019.
Since May, the company's share price has oscillated within a broad symmetrical triangle, with the lower trendline part of long-term uptrend line stretching back to December 2018. Consider buying the stock on a breakout above the pattern. However, before entering a trade, look for price to close above the triangle's top trendline on increasing volume to avoid getting caught in a possible head-fake move. Those who do buy the stock should anticipate a move back to the 52-week high at $108.51 and limit downside with a stop placed beneath Friday's low at $93.08.
Children's Place, Inc. (PLCE)
Children's Place, Inc. (PLCE) operates as a children's specialty apparel retailer that sells accessories, footwear, and other items for kids. The $1.17 billion New Jersey-based company sells its merchandise through more than 1,000 North American stores – primarily located in malls – as well as online and through wholesale channels. Children's Place aims to trim its store count by 40 to 45 this year as part of a multi-year plan to close 300 stores by 2020, but the company also intends to expand its product line by purchasing the rights to the Gymboree and Crazy 8 brands, for which it paid $76 million for in March. Performance-wise, the stock has disappointed so far in 2019, slipping 15% on the year as of Oct. 15, 2019. On the plus side, investors receive a dividend yield of nearly 3%.
Over the past six months, the price has traded within a descending channel that offers swing traders about 20 points of profit potential. A rally from the channel's lower support trendline at $70, combined with a recent cross of the moving average convergence divergence (MACD) line above its signal line, indicates a move back to the upside. Those who buy the stock should set a take-profit order near the channel's upper trendline at $90 and manage risk by cutting losses if the stock fails to hold above this month's low at $69.94.
Natus Medical Incorporated (NTUS)
Natus Medical Incorporated (NTUS) provides newborn care and neurology products and services used for the screening, diagnosis, detection, and treatment of common medical ailments in neonatal care and neurological disorders. Over the past few years, the company has grown its market share in the hearing diagnostics space after it acquired Danish firm Otometrics for $149.2 million in 2017, making it now both a millennial and baby boomer play. Analysts expect the $1.04 billion medical devices maker to post a third quarter profit of 38 cents per share when it reports after the market close on Oct. 24. Although Natus Medical stock has dropped 10% YTD, the price has turned around over the past three months, gaining 18.43% as of Oct. 15, 2019.
Natus shares forged a double bottom pattern between April and June and have continued moving higher into the fall. In early September, the 50-day simple moving average (SMA) crossed above the 200-day SMA to generate a "golden cross" buy signal – an important technical event that indicates a new uptrend. A recent pullback to a three-month trendline provides a suitable entry point for active traders. Those who take a long position should book profits on a move to the November 2018 swing high at $35.66 and set a stop-loss order somewhere below $28.50.