Investing in the latest census data
May 14th 2009 1:00PM
Updated Dec 4th 2009 11:41AM
This is good news according to Ken Gronbach, author of The Age Curve: How to Profit from the Growing Demographic Trend. Gronbach believes that "Latinos have saved our country . . . They represent 14 percent of the population but 25 percent of the live births. The United States is the only western industrialized nation with a fertility rate above the 2.2 percent replacement rate." The credit doesn't rest solely on the shoulders of the Hispanic community, as Asians (the second-fastest growing group) increased 2.7 percent on a year-over-year basis to 15.5 million and the African-American population increased 1.3 percent to 41.1 million.
The influx of minority births coupled with high immigration levels have helped the country's population grow, but it could also help the economy. More people means more basic needs (food, clothing, health care) need to be filled. We could see consumer demand grow, which could lead to better performance for retail stocks. What retailers are most poised to prosper? In the current economic environment, I'd stick with the old pillars of discount retail: Wal-Mart (WMT), Target (TGT), Family Dollar (FDO) and -- my personal favorite -- Big Lots (BIG ).
Yes, Big Lots is battling some resistance, but it is in the midst of a three-month rally that has the shares trading in the $28.50 region. Moreover, it sure looks like the company may be repeating a pattern seen each of the past two years. This pattern takes the stock up to the $35 level before it retreats. If history is, indeed, repeating itself, $28.50 may be a decent entry price for this retailer.
And while retail could see the biggest bounce from the influx of minorities, let's not overlook housing. Rakesh Kochhar, associate director for the Pew Hispanic Center, feels that minorities will help "prop up" real-estate once the economic recovery begins. As CNNMoney.com points out, the current problems in the housing realm cost the Latinos and African Americans most dearly, but that trend could reverse just as quickly.
With white Generation X buyers leaving the housing market wanting (the same article says that there may now be 10 homes for every eight buyers), the growing minority population could step in and fill the void for years to come. After all, with the median age increasing to 36.8 years for the total U.S. population, the median age of the Hispanic population checks in at just 27.7 years.
So watch the housing markets in states with a large concentration of minority population. The article notes that California has the largest Latino population (13.5 million), while New Mexico has the highest percentage (45 percent). New York State has the highest African-American population (3.5 million) and Washington D.C. the highest (56) percentage. Finally, more than 5 million Asians live in California, with Hawaii having the highest (54) percentage. With more Pacific Islanders and Native Americans calling California home as well, it could be time to send your dollars West, young (and not so young) man.