When it comes to saving for retirement, some millennials may be overly risk-averse such that their tolerance for volatility may be similar or even lower than their parents, who are winding down with conservative portfolios as they enter retirement.
While everyone has their unique pain tolerance when it comes to investments, I believe millennials are doing themselves a disservice by not taking enough risks! With many decades worth of working years in the future, millennials ought to realize that they’re better able to handle losses and would, on average, be better off in the grander scheme of things if they owned growth stocks rather than bonds, especially as interest rates continue to soar.
For millennials who want to increase their tolerance for investment risk but are still traumatized by the events of the previous decade, it may be worthwhile to allocate a subsection of your portfolio to growth names as you warm up to them over the course of months or years.
Consider stocks like Stars Group Inc. (TSX:TSGI)(NASDAQ:TSG), a company that’s in a position to capitalize off one of the biggest nascent markets that isn’t marijuana: sports betting. Like marijuana, sports betting has had a stigma for quite some time, but thanks to a recent ruling by the U.S. Supreme Court, sports betting is finally getting the green light in jurisdictions where it’s previously been banned.
As of Q1 2018, only 12% of revenues were derived from the U.S., with over 80% of revenues coming from Europe. With looser regulations on sports betting, Stars Group could make a huge splash in the U.S. market as the company continues to double-down on sports betting.
As it stands, Stars Group has an exorbitant amount of debt (over $6 billion) on its balance sheet following the acquisition of Sky Betting and Gaming, but given the company’s strong, growing cash flow stream, it will just be a matter of time before the balance sheet is effectively deleveraged such that management can look to opportunities to expand south of the border.
At just 14.4 forward P/E, Stars Group is a must-own, especially when you consider the potential for high double-digit earnings growth numbers over the foreseeable future.
Stars Group more than doubled over the past year, and as the company unlocks further value from its recent sports betting acquisition, I think the stock could easily double up again over the next two years, especially if significant moves are made in the U.S.
If you’re a millennial who’s shied away from such growth stocks, it may be wise to nibble away at shares gradually so you don’t panic if shares pull back marginally.
Stay hungry. Stay Foolish.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette has no position in any of the stocks mentioned.