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3 Stocks to Buy as Consumer Spending Shows Tepid Increase

Christopher Vargas

US consumer spending continued to grow in August, suggesting that the economy’s main growth driver is still fueling the longest economic growth period in history. Consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.1% in August. Spending increases on Food/Beverages, Transportation, and Automotive sales drove the slight increase.

Consumer spending has dampened the impact that the ongoing trade war between US and China has had on the economy. The trade war has decreased the amount of business investments and has hit the manufacturing sector hard. Despite the rugged geopolitical and macroeconomic landscape, consumer spending has continued to bolster the economy thanks in part to the lowest unemployment level in almost 50 years. Let’s take a look at some stocks within the sectors that fueled consumer spending growth in August.

Copa HoldingsCPA is a leading Latin American provider of passenger and cargo services through its Copa Airlines and AeroRepublica operating subsidiaries. The transportation company’s shares have risen 23.4% year-to-date, outpacing the broader transportation market’s 5.7% gain. The stock sports a solid 2.7% quarterly dividend payout that can bring solid short-term returns for investors. Earning estimates look spectacular as our current quarter estimates project the airliner firm’s bottom line to surge 78.68% to $2.43 per share on top of a 5.45% sales jump to $709 million. Earnings have been revised higher over the past 90 days across the board, earning the stock a Zacks Rank #1 (Strong Buy).

Brinker InternationalEAT is one of the world's leading casual dining restaurant companies. Brinker International owns, operates, franchises, or is involved in the ownership of the popular dine-in restaurants Chili's Grill & Bar and Maggiano's Little Italy. The stock boasts a hefty dividend yield of 3.63% and a beta ratio of 0.23 that cements the stock as a reliable addition to a portfolio, as it can weather broader market volatility and provide quarterly relief for shareholders. In Q4, the company saw respective top and bottom-line hikes of 2.1% and 14.3%. Consensus estimates project Brinker to see a 4.49% earnings rally and 11.19% sales increase next quarter. Brinker sits at a Zacks Rank #3 (Hold).

Asbury Automotive GroupABG is one of the largest automotive retailers in the country. Asbury offers customers an extensive range of automotive products and services, including new and used vehicle sales and related financing and insurance. The stock is currently trading at a discount relative to its industry average and shares have already soared 50.9% in 2019. Its discounted forward multiple of 10.8X can provide an advantageous entry point for investors looking to ride its potential returns in the closing end of the year. Fiscal 2019 estimates project earnings to pop 10.46% to $9.29 per share and for net sales to grow 4.87% to $7.21 billion. Estimate revisions have trended higher over the past 90 days, giving ABG a Zacks Rank #1 (Strong Buy).

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Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
 
Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
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