How to play Gen Z as it surpasses millennials in wealth and influence, according to Jefferies

Published Mon, Aug 1 20222:32 PM EDT

Gen Z is poised to inherit trillions of dollars in wealth from older generations and will make up 30% of the global workforce in the next couple of years. It's shaping the future already, and that's creating a big investment opportunity, according to Jefferies. "Between now and 2030, their income will increase 5x as they enter the workplace," equity strategist Simon Powell said in a note Monday. "They are set to surpass millennials by the end of the decade, perhaps reaching almost 30% of the global income." Gen Z, which includes those born between 1997 and 2012, represents about 25% of the global population, with about 58% of them residing in Asia. They're more digitally native – they are the first cohort to have grown up with the Internet, mobile phone devices, Google and WiFi – as well as socially conscious, politically aware than generations before them. Career-wise, they're also untethered to singular locations and open to supplementing their main income with side hustles. "Gen Z wealth will be even more powerful when taking into account potential wealth transfers from previous generations," Powell added. "American Baby Boomer and Silent generation households alone are sitting on more than $70 trillion of wealth today that their kids will inherit." That's one reason the luxury sector stands to benefit from the impact of the Gen Z cohort. Online gaming and video streaming is also poised to gain from its purchasing power and influence. Here are 10 stocks with buy ratings from Jefferies for investors looking to play the Gen Z effect. Activision Blizzard is one stock among Jefferies picks that's up for the year, about 19%. According to the firm's research, the digitally native Gen Z is likely to make a positive impact on the online gaming sector as its members are more likely to watch and play e-sports than physical sports. They're also likely to multi task on two devices. Other names are on sale amid this year's bear market, including Apple and Microsoft , two of the most valuable stocks in the market. Their shares are down by about 9% and 17%, respectively, for the year. Alibaba and Block are in the firm's fintech and e-commerce picks, which are poised to have a "slightly positive" impact from Gen Z. The cohort spends eight hours a day online, on average, and that figure is set to rise at an 8% compound annual growth rate. Alibaba shares have lost 25% this year, while Square-parent Block's shares have dropped more than 50%. The desire to stand out is another Gen Z theme, according Jefferies, which is sure to have a positive impact on the luxury industry. LVMH Moet Hennessy Louis Vuitton is one of the firm's luxury picks. The shares have fallen 15% this year. Spotify , Constellation Brands , Chewy and Ulta Beauty are also on the list. — CNBC's Michael Bloom contributed reporting.