By Andrew Leckey

In iffy economies, anything hip or trendy may seem extravagant.

Everyone must be too busy clipping sale coupons and saving soap slivers to have time for such frivolity, right? To the contrary, according to some investment experts who believe that hip can be a smart investor direction.

"People don't feel flush right now so they need a reason to buy stuff," explained Marie Driscoll, retail analyst for Standard & Poor's.

The ability to keep up with often-fickle trends is a worthy skill that many companies have failed miserably trying to master. Those that have done it best often command top dollar for their shares, but their likelihood of continued success could make them worth their premium price.

One retailer that consistently attracts the hippest of young people -- ranging in age from the teens to mid-20s -- is Urban Outfitters Inc., according to Driscoll. Its ever-changing merchandise, ranging from fashion and furniture to electronics, is part of a strategy to transform casual shoppers into motivated buyers. Its innovative Anthropologie and Free People brands are growing faster than its regular Urban Outfitters stores.

"You go into one of its stores and it's like a flea market or thrift market, the appeal being that you don't know what you're going to see," she explained, noting that even snowy weather didn't dampen sales. "It has an ear to both guys and girls as target customers and knows how to change to keep up with those customers."

It is quite possible that when those young customers return home they relax by playing best-selling videogame Guitar Hero, which lets them simulate playing the guitar across a variety of rock music songs. It is from Activision Blizzard Inc., the firm that resulted from the merger of Activision and Vivendi Games.

"Cool games that hardcore gamers like are still coming from the traditional players in this space," noted Toan Tran, technology analyst with Morningstar.

The videogame portfolio of Activision Blizzard includes Call of Duty, Tony Hawk and the role-playing game World of Warcraft. If you're behind the times on those, you'll surely recognize its Spider-Man and James Bond titles. The durability and worldwide appeal of its franchises, especially throughout Asia, positions it for future growth, Tran believes.

For the modern crowd that expects the latest communication devices, Apple is hotter than BlackBerry maker Research in Motion, believes Michael Lippert, portfolio manager of Baron iOpportunity Fund (BIOPX) in New York. While outstanding for e-mail, the BlackBerry hasn't connected with younger consumers, he said.

"There is no more hip company in technology than Apple," agreed Tran.

Besides Apple, another big holding in Lippert's Baron iOpportunity Fund is Google.

"The YouTube service used by millions of people is one reason why Google is still hip and cool," said Lippert. "Other companies such as Facebook, Twitter and Hulu are at the epicenter of what's considered cool."

Another Driscoll favorite is J. Crew Group Inc., whose merchandise always has a fresh look and increasingly attracts shoppers from luxury designer stores, she said. Meanwhile, Tran admires Electronic Arts for its leadership in video games, with Asia the growth driver. Its Rock Band game competes with Activision Blizzard's Guitar Hero.

Investing - Companies that Target Trends & Hip Young Consumers

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