Investments for an aging America—besides health care


Health care is often at the top of the list of industries seen benefiting from an aging America, but there are other investing options—including regional gambling, pet care and e-commerce, just to name a few.

Seniors participate in a Zumba class during the 8th Annual Healthy Living Festival in Oakland, California. (File Photo).
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Americans are living longer than ever, and the population aged 65 or older will be the fastest-growing segment over the next 35 years, according to a new Wells Fargo Securities report entitled, "Longevity—Conventional Wisdom About Aging…is Getting Old."

"Whether from genetics, lifestyle, fitness or access to health care, many Americans are living well into their 80s and 90s. The image of the senior citizen retreating to a rocking chair for a leisurely, peaceful retirement has become archaic," the report says.

The trend of Americans living longer and staying active is expected to benefit casino operators and gambling equipment makers, although the authors of the report cautioned that's "provided the benefits aren't eaten up by rising health care costs, higher living expenses, and/or reduced post-retirement benefits."

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As for the major Las Vegas casinos, the aging wave effect "will be more limited. The growth in Las Vegas is being driven by an increasingly younger, international and nightlife-oriented customer. Given this trend, we think an aging population will have a far greater impact on regional casino operators."

The domestic regional gaming sector's slot machine focus also gives it added benefits in the aging trend since as people age they "become progressively risk averse and migrate to slot machines from table games," according to the authors of the report.

Regional gaming stocks mentioned include Boyd Gaming, Penn National Gaming, Monarch Casino & Resort, and Isle of Capri Casinos.

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The report highlights the cruise sector and a stock such as Royal Caribbean Cruises for opportunity, since it "aligns favorably with an aging demographic, because it offers consumers a wide selection of active/relaxed activities across global itineraries."

The authors point out the benefits the health care sector is expected to see along with medical office buildings and senior housing, but the thrust of the research was to highlight the more unusual investment opportunities that deal with how older Americans tend to spend their money and time.

For example, man's best friend got a notable mention in the report given figures showing that demand for pet care products runs high among older Americans—and a trend of them outspending the average consumer in this category. An estimated 41 percent of the 65-plus age group owns a pet and spends 9 percent above average on that animal.

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Wells Fargo said the "best way" to play the pet trend is J.M. Smucker, citing the company's March 2015 acquisition of Big Heart Pet Brands—a company with some leading pet brands such as Natural Balance, Meow Mix and Milk Bone.

The e-commerce space, with stocks such as Amazon was another sector singled out as right on target for the 65-plus crowd.

"In fifteen years, the 'new 65' will include people who grew up with an Atari 2600, got their first email address in their 30s, and their first iPhone in their early 40s," the report says. "While growth in e-commerce is often attributed to a younger customer demographic that grew up using the computer, we expect the 65-plus demographic to be a significant driver of online shopping. Online shopping appeals to older consumers who either don't drive or have other mobility constraints."