(MONEY Magazine) – For the 77 million Americans born between 1946 and 1964, this New Year's Eve will be different from all the others. When the clock strikes midnight on Dec. 31, the generation that once trusted no one over 30 will start celebrating 50th birthdays. Every seven or eight seconds thereafter, another baby boomer will pass the 50-year mark.

Don't expect the middle-aging of America to usher in an era of stodginess, though. The boomers have glamorized every age they've passed through. Even though they're adding a 50th candle to their cakes, Cher and The Donald will party on, as will millions of other boomers.

And the boomers won't be the only ones with something to celebrate. All Americans can look forward to a growing economy and a soaring stock market. Both will be fueled by increased spending and saving as the biggest generation in U.S. history reaches its peak earning years.

Over the past 75 years, stock prices have tracked the number of 50-year-olds in the population remarkably closely. "If that pattern continues, we'll see a tremendous stock market boom," says Geoffrey Meredith, president of Lifestage Matrix Marketing in Lafayette, Calif.

In fact, Meredith projects that by 2010 the Dow Jones industrial average could hit 15000, more than triple today's level. That means stocks would offer an average total return (including dividends) of around 11% annually over the next 15 years.

To choose stocks that will be the chief beneficiaries of an older, more affluent population, you have to recognize that 50-year-old boomers will live very differently from the way their parents did at the same age. Though boomers may become more conservative in some respects, they'll also create a new fiftysomething lifestyle infused with the values and tastes of 1960s youth culture.

As a minor but telling example, consider coffee drinking, which generally increases with age. In the 1980s, some forecasters expected the percentage of adults who were coffee drinkers to rise from 57% to 60% because of the growing number of baby boomers in their late thirties and early forties.

Those experts were wrong. Between 1980 and 1990, the coffee-drinking share of the population fell to 53%. The reason for the unexpected decline, Meredith explains, is that boomers always preferred to get their caffeine from colas. And that preference didn't change as they got older. It's also worth noting, however, that flat coffee consumption didn't prevent Starbucks from becoming a great success. Though boomers didn't want to drink more coffee, they were willing to pay more for it--as long as the coffee was upscale. As a result, Starbucks' stock has more than quadrupled since the company went public in 1992.

To spot stocks that will be big winners over the coming decade, you first have to identify the key trends that will be powered by the middle-aging of the U.S. population. Here are five boomer booms, along with at least one stock that's a direct play on each:

THE HEALTH-CARE BOOM

It doesn't take a genius to recognize that an older population of boomers will spend heavily on health care. The best way for conservative investors to cash in on this trend is to buy major drug stocks. "Essentially, you want businesses with big investments in research and development," says Jeffrey Roberts, a managing director at Trendline Research & Management, a Richmond money-management firm. "It's easier to earn above-average profits if you're always turning out new and improved products."

A number of big drug and health-care stocks have bright prospects and reasonable prices. Notable are Merck and Johnson & Johnson, both of which were discussed in MONEY's November Wall Street Newsletter.

The drug stock considered to have the strongest focus on new and improved products, however, is Pfizer (recently traded on the New York Stock Exchange under the ticker symbol pfe for $61, with a 1.7% yield), which has estimated '95 revenues of $10.3 billion. "As its recent drugs have rolled out, the company's sales performance has been stellar," says analyst Stephen M. Scala at Cowen & Co. in Boston.

As a result, Pfizer's earnings gains of 21% or more in each of the past two quarters have surprised analysts. "It has been the strongest performer of the seven major drug stocks we follow," says analyst Louis C. Webb at Robert W. Baird & Co. in Milwaukee.

Both analysts think the stock could rise nearly 15% to $70 within the next 12 to 18 months.

THE FINANCIAL SERVICES BOOM

The popular view of baby boomers is that they are reckless spendthrifts. The fact is, that's a bum rap. It's true that boomers love to buy fancy stereo speakers and the occasional BMW, but they're big savers as well. In fact, several recent studies show that they are saving at least as much as their parents did at the same age. As a result, financial services companies that help boomers save and invest will thrive.

The most direct beneficiaries of higher savings will be brokerages, because boomers' investment goals virtually require that they own stocks. "Nowhere is the difference between them and their parents more obvious than in their finances," says Jeffrey Roberts. "While the parents were content with 7% or 8% a year, baby boomers think they have a God-given right to double-digits."

Discount brokerages that give customers direct control over their finances stand to profit the most from increased investing by independent-minded boomers. The obvious leader is $1.4 billion Charles Schwab (SCH; NYSE, $23.75; 0.7% yield). "Schwab caters directly to the baby-boom population, which puts a premium on convenience," says Goldman Sachs analyst Richard Strauss. For example, customers can manage their accounts and place stock trades with a Touch-Tone phone or a computer.

Not only is Schwab the largest U.S. discounter with 42% of the market, it's also a bold innovator. The company was the first to allow customers to buy a wide range of mutual funds through a brokerage account with no commissions. "Schwab's mutual fund business is now growing 35% to 40% annually--twice the rate of its regular brokerage business," says Strauss. He believes the stock could move up 47% to $35 over the next 12 to 18 months.

THE TECHNOLOGY BOOM

Teenagers aren't the only enthusiastic computer buyers nowadays. While boomers may not have much free time to surf the Net, they are the great potential market for pricier, more user-friendly computer equipment.

Right now, the leading tech stocks are Microsoft and Intel, both of which reported terrific earnings in October. (Intel was profiled in last month's Wall Street column.) A more overlooked choice is $14.4 billion Compaq Computer (CPQ; NYSE, $53; no yield), which trades at a price/earnings ratio only 11.3 times estimated '96 earnings. "Compaq is now at the low end of its historical P/E range," says Richard Schutte at Goldman Sachs in New York City. (Microsoft's P/E, by contrast, is in the 30s.)

In addition to being cheap, Compaq can increase its earnings 25% annually over the next five years, says analyst Michael Kwatinetz at Paine Webber in New York City. "Demand for Compaq's products is so strong that the company is backlogged in every product line," he says.

Both analysts think that the shares could gain 42% to $75 in 12 to 18 months.

THE SPECIALTY RETAILING BOOM

Two key trends will determine consumption patterns over the coming decade: First, income is increasing fastest among the most affluent boomers. As a result, the outlook is best for upscale retailers. Second, the new fiftysomethings are increasingly interested in making their domestic life as comfortable as possible, hence the so-called cocooning trend.

The best upscale choice is $787 million Tiffany (TIF; NYSE, $44; 0.6% yield), which we last profiled in the December 1993 Wall Street column when the stock was at $32.75. Despite a 34% gain since then, analysts still consider the shares quite reasonably priced. The reason: Earnings are up 59% over the same period, so the stock now trades at only about 16.5 times estimated '96 results.

Moreover, Tiffany figures to keep turning in strong earnings gains. For one thing, consumers in the 45-to-54 age group are the biggest buyers of jewelry, according to Edward M. Kersch-ner at PaineWebber in New York City. And, says analyst Stephen E. Ham at Rodman & Renshaw in New York City, "Tiffany is the first name people think of when they want fine jewelry." He believes the share price could rise 15% to the low $50s within 12 months.

Bed Bath & Beyond (BBBY; NASDAQ, $26.50; no yield), $590 million in sales, is a pure play on gracious living. "Basically, Bed Bath & Beyond sells brand-name bedroom, bathroom and kitchen furnishings at discount prices," explains Maurice Dayan at Arnhold & Bleichroeder in New York City. "The company's upscale appliances such as Cuisinart and Krups appeal especially to baby boomers," he adds.

The stock is volatile and trades at a relatively high 18.9 P/E. But the analysts still recommend it for moderately aggressive investors because Bed Bath & Beyond's profits could grow more than 20% annually over the next five years. "With less than 2% of the market, Bed Bath & Beyond still has plenty of room to expand," says analyst Amy Ryan at Prudential Securities in New York City. She thinks the stock could rise 32% to $35 or more in the next 12 months.

THE ENTERTAINMENT BOOM

"Boomers--particularly those whose children are grown--want to start having fun again," says Cheryl Russell, editor in chief at New Strategist Publications in Ithaca, N.Y. For that reason, analysts have been strongly recommending the shares of firms such as Disney, Time Warner and Viacom (for more on those stocks, see Money's September Wall Street Newsletter). In fact, the analysts we spoke with recently named Disney as their top pick. "No entertainment company is better positioned strategically or financially," says analyst Alan S. Gould at Oppenheimer & Co. in New York City.

As a more specific play on the aging of the baby boom, however, we'd suggest a company that offers another kind of fun.

Carnival Corp. (CCL; NYSE, $23.75; 1.5% yield). The owner of the world's largest cruise fleet with annual revenues of almost $2 billion, Carnival operates 22 ships in Caribbean, South Pacific and Alaskan waters. "As people get older, they're increasingly likely to take a cruise than, say, spend a long weekend skiing," says analyst Peter McMullin at Southeast Research Partners in Boca Raton, Fla.

Among cruise ship stocks, Carnival has the most solid finances. "Given the firm's strong cash flow, Carnival could be virtually debt-free by 1999," says analyst Paul A. Mackey at Dean Witter in New York City.

Both analysts think the stock could top $32 within the next 12 months, for a gain of nearly 35%.