To The Moon

Millennials are known for making their own reality. And that's certainly the case with their top stocks — not one of their runaway winners this year so far is in the world's most popular index, the S&P 500.

And talk about straying from the mainstream. All 10 of millennials' top performing stocks in 2021 so far, including consumer discretionary play GameStop, health care company Ocugen and communications services firm AMC Entertainment, are brand new holdings for them this year, too.

Not one of these runaway winners was among the top 100 holdings of millennial investors in the fourth quarter, says an Investor's Business Daily analysis of just-released holdings data from Apex Clearing and market data from MarketSmith and S&P Global Market Intelligence. The analysis studies U.S.-based accounts of more than 3 million millennials. The group's average age is 32. And their portfolio is valued at an average of $2,900, up 15% in the quarter. All these winners are up 100% or more this year.

Many of millennials' top holdings are off-the-charts in terms of speculative fever. That includes "meme stocks" popularized online, plus penny stocks and special purpose acquisition companies, causing some more experienced investors to shake their heads.

"Younger investors have recently experienced a lot of volatility — not just in the markets, but in general society — and appear to be willing to experiment and take risks," said Apex President Tricia Rothschild. "We see them investing in technologies and things like crypto, that are far more about the future than they may be about the past."

"Meme" Stocks Win Over Millennials

Don't go looking for well-worn S&P 500 stocks like Nike, McDonald's and 3M among millennials' top holdings. All those dropped off their top 100 most popular stocks in the first quarter, Apex says.

Instead, millennials went all-in on Meme stocks. These are lesser known stocks like retailer GameStop and AMC. All these jumped in value in early 2021 amid a massive short squeeze. The squeeze is fading now, and it's not working in April anymore. GameStop is down roughly 20% in the past month.

But millennials that got in early are up huge. GameStop was millennials' No. 5 most popular stock in the first quarter. And despite the stock's weakness in April, it's still up nearly 700% this year so far, to 150.48. That makes it Millennials' top stocks this year so far. Should you buy GameStop stock now?

Similarly, theater chain AMC is the No. 7 most popular holding with millennials. It wasn't even in the top 100 in the fourth quarter. That stock, too, is down 20% in the past month. But by getting in early, millennials are holding a stock up more than 370% this year. Not bad.

Penny Stocks Catch On

Millennials are still shooting for huge wins, including in stocks with tiny share prices.

It's not a suggested strategy, but was working in the first quarter. Four of Millennials' top 10 performing stocks trade for 5 or less a share.

Health care Zomedica, millennials' No. 22 stock, is up 303% this year to 93 cents a share. Technology play SOS, landing as the No. 54 most popular millennial stock, is up 181% to 4.16. Another health care stock, Senseonics, is up 125% to 1.96. And millennials' No. 39 top holding, industrial Castor Maritime, is up 162% to 48 cents.

"Back To Work" Trade Takes A Break

Millennials were early (and wise) to jump on shares of companies poised to ride the economy's reopening. But they're cooling off on this theme now.

Vaccine pioneer Moderna dropped to millennials' No. 48 most popular holding. That's down from No. 27 in the fourth quarter. The stock, though, is still up 62% this year so far. Similarly, Pfizer fell 24 spots of popularity with millennials to No. 44.

Travel stocks millennials loved last year, like United Airlines, Delta Air Lines and Royal Caribbean Cruises also fell slightly in popularity in the first quarter. Many of these stocks are also cooling off in terms of stocks gains, too. Delta fell to millennials' No. 29 holding, down from 22 in 2020. The stock is up 11% this year, only marginally topping the S&P 500's 10.1% year-to-date gain. Should you buy Delta now?

Don't Shame Millennials

It's easy to suggest millennials are simply chasing after hot stocks with no basis in reality. But that's not really true, says Nicholas Colas, co-founder of DataTrek Research.

For one thing, all three of millennials' very most popular stocks are all S&P 500 mainstream holdings: Tesla, Apple and Amazon.com. These holdings aren't big winners this year. But they are steady. They were also millennials' top one, two and three holdings at the end of 2020.

And yes, it's true some of the top speculative plays may not end well. Many analysts, for instance, say GameStop shares are grossly overvalued. Not a single one of millennials' top performing stocks has an IBD Composite Rating over 80. That means they're not true leaders.

But it's no different than how other generations made early mistakes in investing, too (such as buying overpriced mutual funds in the 1980s). Lessons learned made them all the wiser when they aged and had larger portfolios, Colas says.

And such big stock gains show millennials are willing to stick with the job of investing their own money. And they're willing to make mistakes to learn on the way — and will end up richer as a result in the future.

"It's an intuitively appealing comparison, the wise old boomer and the foolish millennial, but there's little in the historical record to support it," Colas said.

Millennials' Top-Performing Stocks

Biggest year-to-date gains among millennials' 100 most popular holdings

Sources: IBD, S&P Global Market Intelligence, APEX Clearing