Younger Americans are ditching apps for activities - and these stocks are benefitting

MW Younger Americans are ditching apps for activities - and these stocks are benefitting

By Charlie Garcia

Gen Z is shutting off screens - how this 'great unplugging' will charge your portfolio

Young people are engaging with the real world.

It's like watching someone discover fire, except fire has been there the whole time and they've just stopped staring at TikTok long enough to notice.

I've been around long enough to know that investment advice based on generational trends is like dating advice from a divorce lawyer - technically informed, but probably not what you want to hear. And yet here I am, about to tell you that young people might be on to something.

The thesis is simple: Americans, particularly the ones who grew up with smartphones surgically attached to their hands, are walking away from screens and rediscovering the physical world. Books. Churches. Other human beings. In person.

Also read: This money-saving hack could save you over $700 a year - and it's in the palm of your hand

It's like watching someone discover fire, except fire has been there the whole time and they've just stopped staring at TikTok long enough to notice.

The cultural data points are intriguing, if not yet conclusive.

For example, church attendance among young British men jumped to 21% in 2024 from 4% in 2018, according to the U.K.'s Religion Media Centre. The American Booksellers Association reports its membership at 2,433 stores - nearly double the number in 2016, with 323 new independent bookstores opening in 2024 alone. Participation in running clubs has increased 25% over five years, per Running USA, with the strongest growth among adults ages 20 to 29.

But here's where it gets interesting: A Harris Poll found that 77% of Americans would choose a completely in-person social life over a digital alternative, while 81% of Gen Z respondents wish disconnecting from devices were easier. Book-club event listings jumped 31% in 2024, following a 24% rise in 2023, according to Eventbrite.

This sounds like trend-piece nonsense dreamed up by some editor who just finished a digital-detox weekend.

Except. The stocks of four companies positioned around this thesis are up more than 20% on average so far this year. When the cynics start making money, it's time to pay attention.

When even the lawyers smell blood

When you're in court defending accusations that your app encourages teenagers to hurt themselves, your business model might need a rethink.

The portfolio implications become clearer when viewed alongside troubling evidence about the effects of digital life - the kind that makes even Mark Zuckerberg's lawyers nervous.

Meta's $(META)$ internal research documented that Instagram worsens teen girls' body image, contributing to anxiety and depression. Federal courts have ruled that TikTok must face trial over allegations of manipulating minors toward self-harm. When you're in court defending accusations that your app encourages teenagers to hurt themselves, your business model might need a rethink.

But here's the kicker: Organization for Economic Cooperation and Development data show that average cognitive processing ability peaked in the early 2010s - precisely when smartphones achieved ubiquity - and has declined since then. OpenAI's Sam Altman recently observed that Silicon Valley lacks prominent entrepreneurs under 30 for the first time since the 1970s. When the guy building artificial intelligence notices the next generation's actual intelligence is missing in action, that's what we call a clue.

Young people are looking for meaning in activities instead of apps. The Reformation took centuries. The digital Counter-Reformation might take a decade.

Six stocks tell the story

Shares of Scholastic $(SCHL)$ are up more than 30% this year so far, capitalizing on what management calls a "print renaissance" - corporate-speak for "people remembered books exist." The children's book publisher just reported strong quarterly results, with "The Hunger Games" prequel "Sunrise on the Reaping" selling more than 2 million copies in its first month alone.

Print book sales rose 1% in 2024 after two consecutive years of decline, according to the Association of American Publishers. Turns out we won't be paperless after all.

Similarly, Hasbro shares $(HAS)$ are up about 27% year to date. The company is riding a tabletop-gaming market that research firm Arizton projects will reach $34.1 billion by 2030, up from $19.5 billion in 2024 - close to 10% annual growth as consumers rediscover board games. Turns out there's something satisfying about bankrupting your brother-in-law with tiny plastic hotels that Fortnite just can't match.

Live Nation Entertainment's stock (LYV), meanwhile, is up 18.4%. Eventbrite data show 85% of young adults report making close friends at recent live events, as opposed to the zero close friends they made arguing about politics on X. Analysts expect 17% annual earnings growth for the company.

Universal Technical Institute $(UTI)$ is another beneficiary, gaining about 20% year to date. The vocational-training company boasts 83% job placement rates and partnerships with Tesla $(TSLA)$ and Ford $(F)$. Employers desperate for skilled workers are bypassing traditional four-year degrees, reflecting genuine supply-demand imbalances. Turns out the economy needs people who can fix things more than it needs people who can deconstruct Foucault. UTI's management targets 10% annual revenue growth through 2029.

Where the smart money may be hiding

When pessimism meets positive fundamentals, value investors start circling.

Planet Fitness shares (PLNT) are down about 7% year to date despite the company reporting 20.6 million members, up 900,000 year over year. Wall Street's logic is baffling - the community fitness trend is real, but investors are spooked by the company's expansion costs. This is the classic case of the market punishing a company for doing exactly what it should be doing.

When pessimism meets positive fundamentals, value investors start circling.

The same goes for Universal Music Group (NL:UMG) $(UNVGY)$, the Amsterdam-listed music giant. Shares are off about 5% this year, despite the company's control over more than 30% of global recorded music rights. The problem isn't the company's business - it's the zip code. Currency considerations are keeping U.S. investors away, which means this is essentially a 30% discount for anyone willing to buy stock in euros.

When a dominant player in a growing market is on sale because Americans are too lazy to deal with foreign exchanges, that's an opportunity wearing Dutch clogs.

The economics behind the trend, or why this isn't just 'vibes'

Three economic forces explain why this shift has investment legs beyond trendy headlines:

Labor-market disruption: With 10 million unfilled U.S. jobs requiring specific skills, vocational training commands premium pricing. Employers need people who can rebuild transmissions more than people who can explain postmodern theory.

Experience-economy maturation: Consumers eventually tire of goods and services, gravitating toward experiences. Harvard Business School's Joseph Pine predicted this in 1999 - it only took 25 years for us to figure out he was right. Live Entertainment's integrated platform captures this shift while creating competitive moats that streaming services cannot replicate.

Analog premium pricing: Physical products command higher margins when chosen deliberately over digital alternatives. The surge in Scholastic's book sales demonstrates that scarcity creates value.

How to invest in the trend

Weight the four winners (SCHL, HAS, LYV, UTI) at 20% each. Reserve 10% positions for the laggards (PLNT, UMG) as turnaround plays.

Understand that Gen Z's backlash could be a temporary shift and not a permanent one. Social media's network effects are powerful - people stay where their friends are. None of these investments are pure analog plays, and each of them faces business challenges that could swamp cultural tailwinds. UTI must execute expansion. Hasbro competes with video games for holiday spending. Live Entertainment depends on touring artists not canceling.

The bottom line

Political scientist Robert Putnam spent decades documenting America's declining social capital - how people stopped joining clubs, attending church, even bowling in leagues - in his seminal book "Bowling Alone: The Collapse and Revival of American Community." He identified cyclical patterns: community, withdrawal, renewal. If we're entering the renewal phase of that cycle, these companies win.

But here's the thing that keeps me up at night: We needed a generation to tell us they're lonely.

That screens are eating them alive. That they wish disconnecting were easier.

That the sacred cannot be streamed.

Charlie Garcia is founder and a managing partner of R360, a peer-to-peer organization for individuals and families with a net worth of $100 million or more. He holds shares of Canadian Natural Resources (CNQ).

Agree? Disagree? Share your comments with Charlie Garcia at charlie@R360Global.com. Your letter may be published anonymously in Friday's "Dear Charlie" reader mailbag. By emailing your comments to Charlie Garcia, you agree to have them published on MarketWatch anonymously or with your first name if you give permission.

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Younger Americans are ditching apps for activities - and these stocks are benefitting

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