3 Stocks to Profit From the ‘Sharing Economy’

Millennials are not buying houses. They are not buying stocks. So, what do millennials do with their money?
Millennials are the generation born between 1980-2000, and they are entering their prime spending years. They make up the largest generation segment. There are more millennials than baby-boomers, so where they put their money matters.
How can you follow the trends of this generation to make wise investment choices?
There are two areas where millennials differ from other generations. Fitness and health are an area where millennials are willing to spend more. Millennials rank fitness as a priority more than older generations, and they are more willing to spend more money on name-brand fitness gear and health technology.
Second, the “sharing economy” is a buzzword among millennials. More and more millennials are moving away from the notion that one must “own” things.

Millennials Love the Sharing Economy

The sharing economy, or the peer economy, is a form of collaborative consumption. The big names in the industry are companies like Uber, Airbnb and Lending Club (NYSE: LC).
Customers forgo ownership in favor of sharing or renting the item from an owner. Using technology, customers who need something (a room, for example, in a new city) with owners who have excess of it or are currently not using it.
According to economist and author Jeremy Rifkin, “25 years from now, car sharing will be the norm, and car ownership an anomaly.”
More and more millennials say they do not see major purchases as a priority. They are more open to using the item on an on-demand basis. Many millennials are environmentally conscious; they see fewer resources are wasted when items and space can be more effectively used.
The sharing economy brings trade-offs, though. For example, the automobile industry suffers as more and more ride-sharing platforms become popular, and consumers choose to forgo the purchase of a car. For every car-sharing vehicle on the road, the average number of vehicles people own drops by 9. This is a loss of $270,000 to the average auto-maker.
Some traditional companies are looking at ways to adapt. Toyota Motor Corp. (NYSE: TM)  is testing its own sharing program with new cars that sit on its lots.

3 Stocks to Benefit from the Sharing Economy

Worldwide investment in sharing economy startups is over $12 billion. That is more than twice the amount that social networks like Facebook (NASDAQ: FB) and Twitter (NYSE: TWTR) raised.
The potential for the sharing economy businesses is huge. Sharing revenue could reach $335 billion by 2025, up from $13 billion in 2013. The media has been very interested in these collaborative economy startups as companies like Airbnb and Uber have seen tremendous growth and soaring valuations, leaving incumbents feeling threatened.
I wish I could invest in companies like Uber, but most of the big hitters in the sharing economy are privately held. However, last week Credit Suisse released a report that named the top companies that will benefit long term from the increasing popularity of the sharing economy. Here are my top three picks:

1. HomeAway (NASDAQ: AWAY): HomeAway is vacation rental marketplace with more than 1 million properties listed. As sharing properties becomes the norm, HomeAway will experience further traffic and growth. The company is outpacing the industry average revenue growth of 6.9% with revenue growth of 10.1%.
2. Lending Club (NYSE: LC): Lending Club is a U.S. peer-to-peer lending company. It is the world’s largest marketplace to connect borrowers and investors. The company’s shares had been too expensive, but have fallen 45.8% year to date, making it a good time to buy and invest in alternative financing.
3. Yelp (NYSE: YELP): Social media will be the central point for distributing sharing economy offerings. Yelp has also had a rough year, falling 53% year to date. However, the company is showing strength now with revenue leaping 50% since the same quarter one year ago.

Winners and Losers in the Sharing Economy

In its recent report, Credit Suisse lists the top stocks that will be hurt most  by the rise of the sharing economy. Unsurprisingly, the top companies include auto manufacturers and hotel chains.
In reality, if you can think of something that takes up space and is used infrequently, sharing economy startups will figure out a way to make it a business. Think of that lawn mower that sits in your garage. Wouldn’t it make more sense for a neighborhood street to buy one lawnmower to share? How about a neighborhood tool shed? That is the future of the sharing economy. Companies, especially manufacturing companies, will need to learn how to adapt to the changing market.
However, the biggest loser could be these collaborative economy startups. Uber and Airbnb have both been hit with lawsuits this year. They have not yet figured out how to overcome one big hurdle: regulations. Many see the sharing economy startups as a method to bypass regulation under the guise of being technologically innovative. If these companies can overcome the regulation roadblock, they are on a path to growth and success.

This is making ordinary people rich

Ordinary people across America are getting insanely rich. Take Gladys Holm. She never earned more than $15,000 a year as a secretary. But by making one simple move, she was able to leave an $18 million fortune to a children’s hospital when she died. There’s many more just like her. Find out how they did it right here.