Millennials are set to boost America’s economy by adding the power of the youth to workforce. As such, millennials form the largest generational cohort of America’s workforce. As the labor market remains tight and unemployment is at historic lows, an influx of young workers should boost the overall economy.

Further, reports suggest that millennials earn high salaries and spend lavishly on consumer goods, travelling and leisure activities. Moreover, better pay checks also lead to spending on fine dining and entertainment. The space will witness a revolution in the days to come as millennials are likely to spend their disposable income on such products and services.

Under such conditions, investing in stocks from the real estate, consumer discretionary and airline sectors seems prudent. Such sectors are directly impacted by a shift toward leisure spending.

High Salary and Low-Unemployment Driving Millennials’ Growth

Per a USA TODAY report, millennials, especially new job entrants, receive pay hikes, which average 6%. This is double the wage gains of the entire workforce of America.

Further, workers in the age group of 20-24 years, having freshly graduated, benefit the most from the fact that America’s unemployment rate is at a 50-year low currently. Also, millennials are known to be serious job hoppers. One of the primary reasons why they get paid more is that they start from a lower base and climb by switching jobs. As a result, these new entrants and recent graduates’ income is 71.7% of their elders’ average pay.

Are Millennials a Shield to US Recession?

U.S. GDP is staying afloat on high consumer spending. With baby boomers nearing retirement, millennials are pushing the spending charts higher.

Further, a strong job market and low unemployment rate are creating an environment that is supporting consumers spending power. Let’s have a look at the Haver Analytics, Bureau of Labor Statistics and Morgan Stanley Wealth Management GIC’s report on data on consumption levels by age group and source of spending data between 1984 to 2014.

Source: Haver Analytics, Bureau of Labor Statistics and Morgan Stanley Wealth Management GIC

The graph shows maximum consumption between 35 and 54 years and consumption patterns of the millennials and baby boomers. Further, if we can draw a projection, we can say that around 2035 millennials are going to make maximum consumption.

Coming back to the present day, the Global X Millennials Thematic ETF (MILN) has risen 25.7% on a year-to-date basis and 67.6% since its inception in late 2016. The ETF consists of companies that are preferred by the U.S. millennials and are boosted by their rising spending power.

The companies in Global X Millennials Thematic has also shown substantial growth with shares of Apple Inc. (AAPL - Free Report) , Costco Wholesale Corporation (COST - Free Report), Fiserv, Inc. (FISV - Free Report) gaining 76.9%, 45.9%, and 52.7%, respectively, on a year-to-date basis.

What’s more, per a Coldwell Banker study, millennial millionaires make up approximately 2% of the total U.S. millionaire population. In fact, millennials may hold five times more wealth compared to what they hold today. Per the study, millennials will inherit over $68 trillion from their baby boomer parents by the year 2030.

Top 5 Picks

As America’s workforce remains relatively young compared to the other major economies of the world, the country stands to gain. A healthy increase in millennials’ paychecks has led to higher consumer spending and a bump in stocks of companies operating in food and beverage, apparel, entertainment, and fintech sectors.

Given such positives we have shortlisted five stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

The Buckle, Inc. (BKE - Free Report) is a publicly-traded company that operates as a retailer of casual apparel, footwear, and accessories for young men and women in the United States. The company’s expected earnings growth rate for the current quarter is 11.9%. The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 60 days. The Buckle has a Zacks Rank #1 and the stock has gained 20.9% on a year-to-date basis.

YETI Holdings, Inc. (YETI - Free Report) is a publicly-traded company that designs, markets, retails and distributes products for the outdoor and recreation market. The company’s expected earnings growth rate for the current year is 25.3%. The Zacks Consensus Estimate for current-year earnings has improved 4.6% over the past 60 days. YETI Holdings carries a Zacks Rank #1 and the stock has gained 88.1% on a year-to-date basis.

McCormick & Company, Incorporated (MKC - Free Report) is a publicly-traded company that offers spices, herbs, seasonings, and desserts. The company’s expected earnings growth rate for the current year is 8.3%. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the past 60 days. McCormick carries a Zacks Rank #2 and the stock has gained 18.3% year to date.

Fiserv FISV is a publicly-traded company that provides electronic bill payment and presentment services via its Internet and mobile banking software. The company’s expected earnings growth rate for the current year is 27.4%. The Zacks Consensus Estimate for current-year earnings has improved 9.7% over the past 60 days. Fiserv carries a Zacks Rank #2 and its stock has climbed 52.7% year to date.

Equity Residential (EQR - Free Report) is a publicly-traded company that engages in the acquisition, development, and management of rental apartment properties located in urban and high-density suburban communities where renters want to live, work and play. The company’s expected earnings growth rate for the current year is 6.5%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. Equity Residential carries a Zacks Rank #2 and has gained 32% year to date.