Prior to the pandemic, the number of baby boomers retiring was relatively consistent at about 2 million per year since 2011. That pace accelerated in 2020 thanks to uncertainty and job losses during the pandemic.
Many baby boomers are examining their retirement portfolios, asking what stocks make the most sense for their stage of life. Three contributors to Fool.com offered a recommendation to boost returns with businesses future retirees might be familiar with. They are Pool Corp. (POOL +0.66%), Crowdstrike Holdings (CRWD 3.86%), and Airbnb (ABNB 0.15%). Here's why.
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A company with everything going in the right direction
Jason Hawthorne (Pool Corp.): One activity many retirees enjoy is lounging by the pool. And as homeowners with a pool will tell you, having a leisurely way to cool off outdoors doesn't come cheap. Once installed, a lifetime of recurring payments follows. If you want to keep using it, you'll keep paying for as long as you live in the house.
That's a boon for Pool Corp., the largest wholesale distributor of pool supplies in the world. The work-from-home and outdoor living dynamic of the past 18 months has only accelerated demand. That demand has strained industry capacity and supply chains. But not so much to prevent Pool from seeing the benefits.
Business at the company's 408 sales centers was up worldwide. For the first six months of 2021, revenue grew almost 46% compared to last year while earnings per share was up 64%. Management keeps raising guidance and now expects EPS of $14. That would be 56% more than 2020 and 119% higher than 2019. With almost 60% of industry spending considered non-discretionary, the company is set to keep benefiting from permanently higher sales of maintenance, repair, and accessories.
Pool Corp. is affected by several factors beyond its control over the short and long term. For instance, 2020 was an atypically dry and warm year in the U.S. That added momentum to the sales driven by all of the at-home gatherings. Moreover, population growth in the U.S is shifting dramatically to warmer climates. According to the U.S. Census Bureau, population growth in the South and western U.S. will grow three to four times faster than in the Midwest and Northeast over the next two decades. Much of that shift is due to an aging population that will be spending more time at home. It's even more wind in the company's sails looking forward.
Wall Street is well aware of the outlook. Pool's price-to-sales ratio is 3.8. That's up 40% since before the pandemic and it has quadrupled from a decade ago. That said, a new reality has taken shape for the company. Investors hung up on historical valuations may miss out on a story that will play out over the next few decades. Trends in migration and outdoor living might pave the way for Pool Corporation to be one of the cornerstones of a market-beating retirement portfolio.
A shield against online threats
Rich Duprey (Crowdstrike): As retailers and businesses collect more and more of our data, our personal information is increasingly put at risk of being compromised. Amazon's video game streaming service Twitch confirmed just last week it suffered a major data breach that revealed not only the source codes for the company's service, but also the payments data on Twitch creators.
Because cybersecurity is imperative today, and will only grow more important over time, Crowdstrike is a stock that will reward investors now and for years to come.
The cybersecurity company uses sophisticated machine learning, artificial intelligence, and behavioral analysis to detect and thwart cybersecurity risks. Its Falcon platform manages over 6 trillion events weekly while providing customers with cost-effective personalization and customization solutions. As time progresses, it grows smarter, allowing it to recognize and respond to potential threats more quickly.
In less than five years, CrowdStrike's subscriber count has experienced a better than 25-fold increase, growing from 450 to over 13,000, and 98% renew their subscriptions. That allowed annual recurring revenue to jump 70% last quarter to $1.3 billion and analysts expect the company to produce nearly $3.89 billion in sales in five years.
Profits are expected to grow even faster, expanding at the eye-popping compounded rate of 73% annually for the next five years.
Crowdstrike also has the benefit of being able to perform well regardless of the state of economy, because like death and taxes, cybercrime will always be with us.
Get a piece of the travel recovery and see the world
Keith Noonan (Airbnb): If you've got some time to wait for growth stocks to develop before you retire, I think Airbnb is an investment that has the potential to produce fantastic returns. The company has established itself as a clear leader in the short-term vacation rental industry, and it's still in the early stages of realizing its massive long-term potential.
The travel industry has faced severe pressures due to the coronavirus pandemic, but it looks like a recovery is underway, and there's still room for huge growth over the long term. Despite lingering challenges related to the pandemic, Airbnb expects that its current quarterly performance will be its best ever. The business has proven remarkably resilient amid headwinds over the last 18 months, and it's on track to deliver big wins for patient shareholders.
In addition to being a stock that could seriously boost your retirement nest egg, Airbnb's core services could also help retirees enjoy their non-working years in style. The company offers levels of variety and convenience that are unmatched in its service category.
Retirees may also want to take advantage of Airbnb's services in order to rent out properties for extra income. If you're out traveling or simply own multiple properties, it could be worthwhile to take advantage of the company's hosting services in order to generate cash from your property.
Over 4 million hosts already use Airbnb's platform, and the company provides a range of support and damage protection services that should help put retirees' minds at ease. Airbnb provides up to $1 million in property damage protection in the rare event that something in your home is damaged. It also provides up to $1 million in insurance coverage going toward legal fees and guest damages in the event that an injury occurs at the property.
Airbnb is a fantastic company that looks poised to serve up big wins for shareholders, and the company's services could also play a key role in helping you live out your dreams in retirement.
