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Millennial Minded Investing: Uber, Chipotle, & Amazon

This week I joined Zacks stock strategist and host, Tracey Ryniec, on her Zacks Market Edge Podcast to discuss—from a Millennial’s perspective—a few companies that continually grab headlines.

Uber & Controversy

Uber’s whirlwind rise helped the company earn a nearly $70 billion valuation. However, the recent controversies at the top, especially surrounding founder and CEO Travis Kalanick, have caused some people to delete the app and move on from the ride-sharing service. The negative media attention and company turmoil reached such a boiling point that Kalanick recently stepped down.

Despite the negativity surrounding the ride-sharing giant, we discussed that for many millenials, Uber is still nearly ubiquitous. In fact, the company has transformed into a verb that is sometimes used to refer to other ride-sharing apps.

Among people that I know, I don’t recall anyone cutting ties with the service amid the controversy. And cabs, even in a big city like Chicago where I live, are hardly even considered as a means of transportation for many in my generation. Uber can be even more helpful and useful in smaller cities or college campuses where cabs were almost non-existent.

Millennials I know do use Lyft, but it seems the service is often used as a backup to Uber when surge pricing becomes far too high.

For some Millennials the company could become a long term replacement for a owning a car, especially in cities. Quick, rental car style options such as Zipcar seem to be far less popular.

Many Millennials are likely to jump on Uber stock if the ride-sharing company files for an IPO, based purely on their experience with the company’s service (also read: Will Uber Be the Hottest IPO of 2017?).

If Uber can sort out its internal issues, which could harm it in a long run, the company seems ready to transform the auto and cab industry and become a game changing company for years to come.

Is Chipotle Ready For A Comeback?

Ever since Chipotle’s CMG food safety scandal, the fast-casual Mexican grill has struggled as the company failed to regain many consumers and investors.

However, in my experience, the chain has hardly lost a stride. At Indiana University’s campus in Bloomington, the line at Chipotle is often stretched to nearly outside. The Chipotle near the Loop campus of DePaul University in Chicago often experiences similar traffic around lunch and dinner hours.

The food is quality, filling, and most often healthy, and the price point is relatively competitive compared to comparable dining options.

Anecdotally and through personal experience, Chipotle seems to be thriving. Still, since Chipotle’s stock does not reflect my current confidence in the brand whatsoever, I would have a hard time investing at this moment.

While the company’s popular locations are still busy at peak hours, same-store sales have barely recovered since 2015. The stock has failed to rebound in the last few years and it is currently a Zacks Rank #4 (Sell), with an “F” for Value in our Style Scores system.

Amazon, Home Delivery, & Brick and Mortar

Amazon AMZN has become one of the largest companies in the world, and Jeff Bezos looks ready to conquer any industry he chooses. But shopping malls and brick and mortar retail might be the first industry that the online powerhouse is ready to push to the brink of extinction.

Online shopping, specifically on Amazon as a Prime member, quickly became popular among Millennials. The ability to have almost anything delivered to your door within two days is hard to resist, especially as more and more young people flood back into cities around the country. With less young people owning cars in the city, it isn’t hard to see why delivery services have become so common.

Food delivery services such as Grubhub GRUB or smaller outlets like Postmates are used with great regularity among young people throughout American cities, and Amazon’s buyout of Whole Foods WFM might help drive the grocery delivery revolution that PeaPod helped start years ago.

The massive indoor and outdoor shopping mall has most likely seen their day come and go. But, even with the popularity of buying everything online, Amazon and the internet will likely never replace the idea of “going shopping.”

There will always be a portion of the population that wants to walk around and go shopping as something to do, which underscores the importance of offering an “experience” in the store. Millennials are more prone to go to a store if they feel that they are missing out on something cool by not going.

More Stock News: 8 Companies Verge on Apple-Like Run                   

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
GrubHub Inc. (GRUB): Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report
 
Whole Foods Market, Inc. (WFM): Free Stock Analysis Report
 
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