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Americans are feeling optimistic about the current state of the economy, and aren’t disconcerted by a pending recession. This is because consumer outlays are still strong, with sales at U.S. retailers rising in May despite economic challenges.
Retail sales that account for one-third of consumer outlays slowed down last year. However, a strong labor market and retailers’ initiatives to offer a wide product mix at a competitive price helped sales improve, pointing to a resilient economy.
Sales at U.S. retailers increased by 0.3% in May from April and registered a year-over-year increase of 1.6%, per the U.S. Census Bureau. Additionally, the National Retail Federation stated that retail sales have gone up 0.4% in May from April, and were up 4.4% year over year, per their calculations.
Sales in most of the retail categories improved, led by healthcare stores, grocery stores, furniture stores, and even online sales. Consumers, in reality, increased spending on all kinds of services, including restaurants, hotel stays, and flights. This is because more jobs were added to the U.S. economy, and the unemployment rate continues to hover at historic low levels.
The U.S. jobs market shrugged off all kinds of headwinds, including the debt ceiling crisis, banking turmoil, elevated inflation, and an aggressive Federal Reserve (read more: 5 Stocks to Gain From Stunning Jobs Growth in May).
What’s more, the consumer outlook for the month of June looks even more positive. Easing of travel restrictions due to the official end of the coronavirus pandemic, coupled with lower gas prices, encouraged many Americans to travel in summer. Simultaneously, the Fed’s pause on interest rate hikes in its latest policy meeting held in June is expected to boost consumer spending.
Thus, courtesy of an uptick in household spending, consumer discretionary companies are positioned to gain the most as outlays play a pivotal role in shaping their revenues.
We have, thus, selected four consumer discretionary stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Woodmark (AMWD - Free Report) is the third-largest manufacturer of kitchen and bath cabinets.
AMWD, currently, has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 22.3% over the past 60 days. AMWD’s expected earnings growth rate for the next five-year period is 13%. Its shares have already gained 6.6% in the past five-year period.
GIII Apparel Group (GIII - Free Report) is a manufacturer, designer, and distributor of apparel and accessories under licensed brands, owned brands, and private label brands.
GIII, currently, has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 6.9% over the past 60 days. GIII’s expected earnings growth rate for the next five-year period is 15%. Its shares have already gained 7.7% in the past five-year period.
Marriott International (MAR - Free Report) is a leading worldwide hospitality company focused on lodging management and franchising.
MAR, currently, has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 8.1% over the past 60 days. MAR’s expected earnings growth rate for the next five-year period is 15.5%. Its shares have already gained 6.8% in the past five-year period.
Playtika (PLTK - Free Report) develops mobile games. It owns a portfolio of casual and casino-themed games.
PLTK, currently, has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 10.1% over the past 60 days. PLTK’s expected earnings growth rate for the next five-year period is 12.8%. PLTK’s expected earnings growth rate for the current and next year are 26.1% and 8.1%, respectively.
Shares of American Woodmark, GIII Apparel, Marriott International, and Playtika, by the way, have gained 47.1%, 47.3%, 18.3% and 28.1%, respectively, so far this year.
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4 Big Winners as Americans Go on a Spending Spree
Americans are feeling optimistic about the current state of the economy, and aren’t disconcerted by a pending recession. This is because consumer outlays are still strong, with sales at U.S. retailers rising in May despite economic challenges.
Retail sales that account for one-third of consumer outlays slowed down last year. However, a strong labor market and retailers’ initiatives to offer a wide product mix at a competitive price helped sales improve, pointing to a resilient economy.
Sales at U.S. retailers increased by 0.3% in May from April and registered a year-over-year increase of 1.6%, per the U.S. Census Bureau. Additionally, the National Retail Federation stated that retail sales have gone up 0.4% in May from April, and were up 4.4% year over year, per their calculations.
Sales in most of the retail categories improved, led by healthcare stores, grocery stores, furniture stores, and even online sales. Consumers, in reality, increased spending on all kinds of services, including restaurants, hotel stays, and flights. This is because more jobs were added to the U.S. economy, and the unemployment rate continues to hover at historic low levels.
The U.S. jobs market shrugged off all kinds of headwinds, including the debt ceiling crisis, banking turmoil, elevated inflation, and an aggressive Federal Reserve (read more: 5 Stocks to Gain From Stunning Jobs Growth in May).
What’s more, the consumer outlook for the month of June looks even more positive. Easing of travel restrictions due to the official end of the coronavirus pandemic, coupled with lower gas prices, encouraged many Americans to travel in summer. Simultaneously, the Fed’s pause on interest rate hikes in its latest policy meeting held in June is expected to boost consumer spending.
Thus, courtesy of an uptick in household spending, consumer discretionary companies are positioned to gain the most as outlays play a pivotal role in shaping their revenues.
We have, thus, selected four consumer discretionary stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Woodmark (AMWD - Free Report) is the third-largest manufacturer of kitchen and bath cabinets.
AMWD, currently, has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 22.3% over the past 60 days. AMWD’s expected earnings growth rate for the next five-year period is 13%. Its shares have already gained 6.6% in the past five-year period.
GIII Apparel Group (GIII - Free Report) is a manufacturer, designer, and distributor of apparel and accessories under licensed brands, owned brands, and private label brands.
GIII, currently, has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 6.9% over the past 60 days. GIII’s expected earnings growth rate for the next five-year period is 15%. Its shares have already gained 7.7% in the past five-year period.
Marriott International (MAR - Free Report) is a leading worldwide hospitality company focused on lodging management and franchising.
MAR, currently, has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 8.1% over the past 60 days. MAR’s expected earnings growth rate for the next five-year period is 15.5%. Its shares have already gained 6.8% in the past five-year period.
Playtika (PLTK - Free Report) develops mobile games. It owns a portfolio of casual and casino-themed games.
PLTK, currently, has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 10.1% over the past 60 days. PLTK’s expected earnings growth rate for the next five-year period is 12.8%. PLTK’s expected earnings growth rate for the current and next year are 26.1% and 8.1%, respectively.
Shares of American Woodmark, GIII Apparel, Marriott International, and Playtika, by the way, have gained 47.1%, 47.3%, 18.3% and 28.1%, respectively, so far this year.
Image Source: Zacks Investment Research