Yahoo Finance 5 Top Stocks to Gain From Strong Consumer Spending Trends
Households in the United States had increased spending in October, banking on a jump in income and easing inflation. Per the Commerce Department, consumer outlays advanced at a seasonally adjusted 0.8% in October compared to the prior month and registered the strongest gain since June.
Households, in reality, had spent on almost all essential commodities as well as new vehicles. In fact, spending on big-ticket items indicated that consumers are eager to pay higher prices amid rising interest rates. Even after adjusting for inflation, spending rose 0.5% in October from the prior month, marking its biggest jump since January.
Notably, an increase in wages helped boost spending. American household income increased 0.7% in October from September, added the Commerce Department. To top it, a slight easing of stubbornly high inflation gave consumers the wherewithal to spend more.
The personal-consumption expenditures (PCE) index rose 6% in October from a year ago, less than September’s year-over-year increase of 6.3%. Similarly, the consumer price index (CPI) increased 7.7% in October compared with a year ago, less than September’s annual increase of 8.2%, according to the Bureau of Labor Statistics. By the way, U.S. wholesale inflation, too, showed signs of cooling down in October.
Meanwhile, a jump in retail sales in October signified that consumers have undoubtedly stepped up their spending. Sales at U.S. retailers were expected to rise 1.2% in October from September, but they actually jumped 1.3%, its biggest increase in eight months.
Lest we forget, retail sales were almost flat in September with August. Nevertheless, the jump in retail sales in October was mostly due to an increase in car sales and higher petrol prices. However, excluding cars and petrol, retail sales still increased a solid 0.9% in October.
Retail sales, no doubt, constitute a bulk of consumer spending and offers clues on the strength of the economy. And with sales increasing in all the primary retail segments in October, it seems the economy is recouping from the hammering it took during the pandemic.
Sales at restaurants were also encouraging in October, indicating a healthy economy and strong consumer spending trends. Restaurant sales increased by 1.6% in October.
Thus, from an investment standpoint, courtesy of an increase in consumer spending, consumer discretionary companies are posited to gain the most as outlays play a crucial role in determining their revenues. We have, thus, selected five consumer discretionary stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Hilton Grand Vacations HGV, a division of Hilton Worldwide, is engaged in the hospitality business. HGV sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 19.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 60.9%. HGV’s projected earnings growth rate for the next year is 24.6%.
lululemon athletica LULU is a yoga-inspired athletic apparel company that creates lifestyle components. LULU has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.2% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 27%. LULU’s projected earnings growth rate for the next year is almost 15%.
Wyndham Hotels & Resorts WH provides a hotel and resort chain. WH carries a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 5.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 21.5%. WH’s projected earnings growth rate for the next five-year period is 7.9%.
Monarch Casino & Resort MCRI is dedicated to delivering the ultimate guest experience by providing exceptional services as well as the latest gaming, dining and hospitality amenities. MCRI has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 6.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 29.2%. MCRI’s projected earnings growth rate for next year is 9.7%.
Crocs CROX is one of the leading footwear brands focusing on comfort and style. CROX has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 2.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 23.7%. CROX’s projected earnings growth rate for the next year is 4.5%.
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lululemon athletica inc. (LULU) : Free Stock Analysis Report
Monarch Casino & Resort, Inc. (MCRI) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
Hilton Grand Vacations Inc. (HGV) : Free Stock Analysis Report
Wyndham Hotels & Resorts (WH) : Free Stock Analysis Report
