Invest Like a Hipster
Calla is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Hipsters get a lot of flak for being jaded consumers cannibalizing past generations’ creativity. Regardless of your animosity towards or uncomfortable resemblance to the constantly changing hipster stereotype, we all admit that this group of twenty-something wannabes is on top of nearly every consumer trend in the country. Remember when you made fun of your awkwardly sarcastic cousin for wearing grandma’s 1950s era glasses? Every designer has since put out a similar pair and there is such a thing as grandma chic. Likewise, even though we still poke fun at the aspiring graphic designer working on a Mac at the coffee shop, we all own Apple stock and no one can deny the explosive growth of specialty coffee stores. If there is one thing hipsters are known for, it is superficial tongue-in-cheek consumerism. In that spirit, here are four stocks with hipster ticker names to give you some investing ideas. I have hand-curated them from NASDAQ listings, but it’s up to you to decide if these companies are dollar bin finds or boutique rip-offs.
The ticker HIP belongs to a penny stock exploration company trading at five cents on an exchange you’ve never heard of, so we’ll start with INDY, the iShares S&P India Nifty 50 Index Fund (NASDAQ: INDY). This BlackRock exchange traded fund tries to match the performance of the top 50 companies by market capitalization in the Indian market. It has an expense ratio of .92%, which is more than twice the average ETF expense ratio and a little higher than traditional index funds, making it a tad pricey. INDY has handily beat the market this year and is up 24% year-to-date, but will that performance continue? Morningstar analyst Patricia Oey notes that even after a recent rally, INDY is trading below its average five-year trailing 12-month PE – and that it will likely see more growth in 2013. While Morningstar and ETFTrands’s Tom Lydon are bullish on INDY based on macro trends like steady GDP growth and insulation from European markets, one Seeking Alpha analyst predicts 2013 growth based on foreign investor inflows alone. It’s up to you to decide if INDY is the next big thing in ETFs or if it’s already played out.
Our next picks pay homage to the most beloved hipster consumable: beer! Craft Brew Alliance (NASDAQ: BREW) owns four small beer brands, Widmer, Redhook, Kona, and Omission. While BREW represents the craft brew segment and not the more truly hipster microbrew segment, which has no public companies, only some hipsters and few average American beer drinkers know the difference between craft and micro. Regardless, BREW offers plenty of trend-conscious beer, from Kona’s coffee porter to Widmer’s bourbon-aged winter ale to Omission’s gluten-free beers. However, the company trades at a PE of 48, by far the highest valuation of any public American beer company – and that’s after downward 2012 guidance and a share price crash. It’s up to you to decide if BREW is more body or suds.
Hipsters rebranded Pabst Blue Ribbon aka PBR from your uncle’s blue collar beer to the cool cheap beer; wherever there are hipsters, there are open cans of PBR and more than a few mason jars. The PBR we’ll look at is actually the Brazilian parastatal oil company Petrobras (NYSE: PBR). But Brazil’s pretty baller and so is modern hybrid socialism. PBR was a media darling growth stock in 2008 and 2009, when it revealed massive offshore reserves just as the Brazilian economy pulled through the global recession with barely a scratch. However, PBR left the limelight in 2011 and 2012, when the Brazilian government hurt profits by keeping oil and gas prices low and PBR routinely missed earnings estimates and revised its massive investment plan’s costs up and future profits down. Investors have dumped PBR shares on rising uncertainty and the company now trades at $19 with a PE of 12 and a 5% yield, down from a 2009 high of $51. The government recently made some noise about increasing oil and gas prices and the company is still developing the largest reserves found in the Americas in the last thirty years, but PBR may be a gamble best left to the young and reckless.
Finally, where would a hipster be without cities and clothes? Our last pick, URBN, has truly capitalized on taking hipster trends and marketing them back to hipsters and the masses alike at a high markup. Urban Outfitters (NASDAQ: URBN) actually represents Anthropologie, Free People, Terrain and BHLDN, as well as its namesake brand. While these immensely popular stores have churned out steady growth – five year revenue growth is 12% -- the company missed market expectations in 2012. Still, the stock is trading near its 2012 high of $40 and the share price is up an impressive 40% YTD. It’s up to you to decide if URBN is an underappreciated trendsetter with a PE of 30 or if it and neon plastic sunglasses are washed up fads.
CallaMarie owns shares of Craft Brewers Alliance and Petroleo Brasileiro S.A. (ADR). The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Petroleo Brasileiro S.A. (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!