With up-to-the-second stock quotes and journalists filing reports, articles and tweeting their opinions constantly, there is an incredible amount of "noise" in the market.
That's why it is valuable to really think about what the business landscape will look like in five to seven years. If you can do that, you can start to identify stocks that are well placed to capitalise on that landscape.
So here is a theme that is structural, not cyclical, and three stock picks that can benefit from it.
The retiring baby boomer trend
For the purposes of this article, retiring baby boomers are Australians who will be aged 70 or older by 2020. By 2020, the number of Australians who will fit into this category will double from current levels. Increased demand for aged care, hospitals and wealth management as a result of this trend is well documented. But these three stocks help play the theme in a more unconventional way.
Flight Centre Travel Group (ASX: FLT): If you asked Australians what they are looking forward to in retirement, "travel" would be one of the most common responses. But living in Australia means there is a barrier to that goal. Our geographic isolation can make booking long multi-stage holidays purely over the internet challenging.
In addition, many travellers still prefer face-to-face interactions when spending significant amounts of money on overseas travel. The fear of making a mistake that affects the end experience, or that costs money to fix, feeds into the desire to be helped by an experienced professional.
If you add the fact that the retiring baby booomer generation has the highest levels of retirement savings of any generation to spend on leisure activities, the competitive advantage derived by Flight Centre's large store footprint becomes apparent.
Greencross Limited (ASX: GXL): Spending on pets and pet care in Australia ranks among the highest in the world. Greencross is a multi-faceted way to play this theme. The business began as a service provider to veterinary clinics and now offers consumer products through its acquisition of several retail chains that sell high quality pet food and accessories.
Disposable household income rises as childcare costs end, school fees cease and children move out of home. Greencross has identified a key customer demographic as those pet owners who treat their companions as family, and "empty nesters" with more income to spend on spoiling their pets can certainly fit into this category.
Ardent Leisure Group (ASX: AAD): Ardent is a complex business, but by virtue of its acquisitions, it is one of the largest gym and fitness club operators in the country. As populations age, the need to exercise to maintain bone density and muscle strength so that quality of life remains high becomes crucial.
The gyms and fitness clubs owned by Ardent are full service offerings, operating under the Goodlife brand in 75 locations. This full service offering is important for baby boomers, as it means that the gym offers classes and different workout options, including squash courts and pools. A further advantage is that classes can be tailored to suit different levels of fitness and mobility, which is something full service gyms will do much more of in the future.
These factors are important in differentiating the value proposition of the gyms owned by Ardent from franchised 24-hour fitness clubs, which do not offer classes or varied workout options. Ardent is also largely immune from the saturated and hyper competitive gym market of New South Wales, with the portfolio concentrated in Queensland, Victoria and Western Australia.
All three stocks have suffered share price falls as a result of short-term headwinds in recent months. But for those investors willing to look through these potentially transitory issues, the rewards of investing alongside a long-term structural trend in the Australian economy make these stocks well worth investigating.
